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Partnership Opportunities In the German Manufacturing Industry, For Cross-Border UK Companies

January 27, 2025
Partnership Opportunities In the German Manufacturing Industry, For Cross-Border UK Companies

For cross-border UK companies, the German market presents a wealth of opportunities. As the largest economy in Europe and the fourth-largest in the world, Germany offers a stable and prosperous environment for businesses looking to expand their reach. However, entering a new market and forging partnerships abroad can be filled with challenges and uncertainties.

In this article, we’ll explore the key sectors of the German manufacturing industry – the automotive, electronics, mechanical engineering, and chemical sectors. We’ll also discuss the opportunities and challenges UK companies must address when entering the German market, and provide practical guidance on how to approach cross-border partnerships successfully.

Contact clearBorder to streamline your international trade operations.

Overview of Germany’s Manufacturing Industry

Germany’s manufacturing sector stands as a cornerstone of both the national economy and the industrial landscape of European countries. As of 2020, the German manufacturing sector employs 7.5 million people, making it the country’s largest employment sector.

In 2023, manufacturing made up 20.4% of the gross value added in the German economy – significantly higher than the average gross value added of 16.4% in the EU. Despite Brexit, bilateral trade between the UK and Germany remains strong, with trade volume for 2022 reaching 136 billion euros.

The country’s commitment to Industry 4.0, combined with its strategic location in central Europe and highly skilled workforce, creates an attractive environment for UK companies looking to trade with Germany. UK businesses can particularly benefit from Germany’s robust supply chains, technological expertise, and access to the broader EU market through German manufacturing partnerships.

4 Key Sectors in the German Manufacturing Industry

Several key sectors dominate German manufacturing, each contributing to the industrial strength and economic output of the German industry.

1. Automotive Industry

Germany’s automotive industry is its largest manufacturing sector. German automotive companies combine traditional engineering with cutting-edge innovation to produce some of the most reliable and well-known motor vehicles in the world.

The German car industry is also at the forefront of the global transition to electric vehicles, and autonomous driving technology, with German manufacturers investing heavily in future mobility solutions that lower society’s carbon footprint. Germany’s automotive sector is the largest in Europe. 

According to Germany Trade and Invest’s industry overview, in 2023  Germany’s automotive sector:

  • Made up 17% of total German exports
  • Produced 1.27 million passenger electric vehicles
  • Generated 24% of total domestic industry revenue
  • Employed approximately 780,000 people

Some major players in the German car industry include Volkswagen Group, Bavarian Motor Works
(BMW Group), and Merecedes-Benz Group (formerly Daimler Benz).

2. Electronics Industry

As a driving force behind Germany’s Industry 4.0 initiative, the electrical industry plays a crucial role in the country’s digital transformation. The industry includes the production of consumer electronics to industrial automation systems, with German companies leading in areas such as smart manufacturing solutions and industrial sensors.

According to the German Electrical and Electronic Manufacturers’ Association (ZVEI), in 2023 the electrical engineering industry had:

  • Turnover of €238 billion (10% of total German manufacturing output)
  • Employment of 895,000 people
  • €9.7 billion in exports to the UK 

Leading companies in the German electrical industry include Bosch (owned by Robert Bosch Foundation) and Siemens AG.

3. Mechanical Engineering

German machinery is synonymous with precision, reliability, and innovation. The sector’s strength lies in its diverse range of specialised machinery, from advanced industrial production equipment to precision tools. 

Mechanical engineering firms are typically highly specialised Mittelstand companies with strong export orientations. According to Germany Trade and Invest’s industry overview of 2022, the mechanical engineering industry accounts for:

  • 16% of global machinery trade
  • 3.5% of the German economy’s gross value added

In 2021, the mechanical engineering industry also saw 17 billion euros in total domestic industry research and development spending.

ThyssenKrupp Group, an industrial engineering and steel production conglomerate, is a major player in the sector.

4. Chemical Industry

As Europe’s largest chemical industry, Germany is a global leader in specialty chemicals. The sector is characterised by a strong focus on sustainability and environmental protection, with significant investments in green chemistry and circular economy initiatives.

The industry’s innovation capability is demonstrated through its many patents and breakthrough developments in materials science. The German Chemical Industry Association (VCI) reports:

  • Sales of 225 billion euros in 2023 (60% of which were abroad)
  • Employment of 479,500 people

Major chemical companies in Germany include:

  • BASF: The largest chemical company in the world, with €87.3 billion in revenue in 2022. BASF specialises in a range of products, from chemicals for consumer goods like personal care and cosmetic products to chemicals used in mining and agriculture
  • Bayer AG: Life sciences company with over €50 billion in revenue in 2022

Opportunities for UK Businesses in German Manufacturing

Supply Chain partnerships

German manufacturers are known for their reliability and adherence to strict quality standards, making them ideal partners for UK businesses seeking to enhance their product offerings and remain competitive in the global market. UK businesses can benefit from Germany’s robust supply chains by forming strategic partnerships with German manufacturers.

UK businesses also have the opportunity to export goods from the UK to the German manufacturing sector, for example, in industries where German companies cannot produce components on their own.

Technology and Innovation Collaborations

Germany’s strong focus on innovation and commitment to Industrie 4.0, which is aimed at combining production methods with state-of-the-art information technology, presents significant opportunities for UK businesses.

By partnering with German companies, UK firms can gain access to advanced manufacturing techniques, manufacturing automation solutions, and R&D capabilities. This can lower manufacturing costs and help UK businesses create products of higher quality.

Joint ventures with innovative German partners can help UK businesses stay at the forefront of their respective industries and drive growth through innovation.

Sustainability Initiatives

As Germany prioritises sustainability and environmental protection, UK businesses can benefit from collaborating on green initiatives. German companies are investing heavily in sustainable manufacturing practices, renewable energy, and circular economy solutions.

By aligning with German partners on sustainability goals, UK firms can enhance their environmental credentials, meet growing consumer demands for eco-friendly products, and contribute to the global fight against climate change.

UK businesses specialising in green technology or products may have significant opportunities for exporting to the German market, as many German companies are looking for sustainable solutions for their business.

Access to a Skilled Workforce

Germany’s highly skilled workforce is a key asset for UK businesses seeking to expand their operations. By establishing partnerships with German manufacturers, UK companies can tap into a pool of experienced professionals with expertise in various fields, from engineering to IT.

Germany’s skilled workforce can benefit UK businesses in many ways. For example, UK businesses can partner with German companies to manufacture their products using German labour. UK businesses can then import the products to the UK market, with the help of consultancy services.

Access to skilled labour can help UK businesses overcome talent shortages, drive innovation, and improve overall competitiveness in the UK market.

Challenges and Considerations

While the German manufacturing industry comes with numerous opportunities, UK businesses must also navigate various challenges when establishing partnerships and trading with German companies.

  • Supply chain disruptions: Exacerbated by global issues like the COVID-19 pandemic and geopolitical tensions, supply chain disruptions can impact the timely delivery of goods and components. UK companies must work closely with their German partners to develop contingency plans and maintain open communication to avoid disruptions that could affect business operations.
  • Raw material shortages: Particularly in the electronics and automotive sectors, raw material shortages can lead to production delays and increased costs. UK businesses should collaborate with trade consultants and German partners to identify alternative sourcing options and implement efficient shipping strategies to minimise delays. 
  • German business culture: German culture emphasises punctuality, formality, and direct communication. UK businesses should take the time to understand and respect cultural differences to foster strong, long-lasting relationships with their German counterparts. 

How to Enter the German Market

For UK businesses looking to enter the German market, a well-structured approach is essential to navigate the complexities of cross-border trade. In general, UK businesses should follow these key steps:

  • Conduct thorough market research and analysis to identify potential partners, assess competition, and understand the demand for their products or services. The German Trade & Invest (GTAI) agency offers valuable resources and support for foreign companies seeking to enter the German market.
  • Become familiar with the regulatory landscape in Germany. As an EU member state, Germany adheres to EU-wide regulations and standards. Ensure your products meet relevant CE marking requirements and comply with EU directives.
  • Ensure compliance with customs procedures. Partner with a reputable customs broker to streamline the import process and ensure compliance with all necessary documentation and procedures.

How Trade Consultancy Firms Support Partnership Opportunities

International trade consultancy firms like clearBorder play a crucial role in helping UK businesses successfully partner with German companies. With extensive experience in import regulations, tariffs, and customs procedures, consultancy firms like clearBorder can help UK businesses trade effectively with their German partners.

clearBorder offers training that helps UK businesses understand German regulations and customs compliance to minimise the risk of supply chain delays and penalties due to non-compliance. By partnering with an international trade consultant, businesses can also save time and resources that would otherwise be spent on understanding the intricacies of cross-border trade.

Contact clearBorder today →