Germany's Chemical Industry

As the European leader in chemical sales, exports, investment and R&D expenditure, Germany plays a decisive role in meeting global chemical demand. The chemical industry in Germany offers investors fertile ground for both production and product development within Europe's largest economy.

^{Source: VCI, Chemiewirtschaft in Zahlen 2022 (update: February 07, 2022)}

The European chemical industry’s declining share in the world market might seem alarming. However, sustained and significant investment activity in Germany signals a high level of global competitiveness, with basic chemicals surprisingly continuing to play a major role. Here you will find selected published investment activities in chemical industry production facilities in Germany.

Investments in the Chemical Industry in Germany [pdf]

After several years of excellent business, chemical companies are seeking non-cyclical growth segments. M&A activities - primarily in the small-volume specialty chemicals sector - have slowly altered the characteristics of the production landscape in the highly industrialized regions. Below please find selected M&A transactions carried out by German chemical companies to sharpen their portfolios.

M&A deals involving German Chemical Companies [pdf]

Stable and Sustained Growth

During the period 1960 to 2010, chemical industry revenue in Germany increased from EUR 12 to EUR 171 billion (according to Feri AG and the German Chemical Industry Association – VCI); resulting in an average nominal growth rate of 5.4% per year (real growth rate: 3.1%). Over the same period, the number of employees decreased from 458,000 to 415,000; increasing productivity sixteen-fold indicated by revenue per employee levels of EUR 412,000 in 2010.

Global Production Leader

When it comes to chemical production locations, Germany is a global heavyweight, ranking first in Europe. With 2018 turnover of EUR 157 billion (VCI), the German chemical industry played a leading role in European performance, generating almost 30 percent of total EU-28 sales of EUR 577 billion. Germany has occupied the world number three spot in global chemical revenue ranking for a number of years, being surpassed only by China (EUR 1,488 billion) and the US (EUR 505 billion) in 2018.

New Markets

“New” raw materials and energy and mobility: these 21^st century megatrends offer enormous opportunities for Europe’s technology-driven chemical industry. Germany in particular will play a leading role in shaping these trends, thanks to the strong interdisciplinary character of German industry. This capability is vital, as cross-sector technologies and the development of new materials are an absolute necessity.

From Commodities to Specialties

The development away from mass commodity or bulk chemistry to fine & specialty chemical production can be best observed using a “push-and-pull” model. As a result of high cost pressure, the low-margin equipped mass commodity chemistry is increasingly pushed into the raw materials processing countries. At the same time, Europe has access to the necessary technologies and know-how required in the constantly growing specialty chemicals market. Europe, with Germany at the forefront, is proving very attractive to the specialty chemical industry.

Please contact us for more information on the German chemical industry or for an individual project assessment.

Plug & Play Production Concept: Chemical Parks

Today, the “plug & play” concept is widely understood and appreciated. Sites (i.e. chemical parks) commonly offer a comprehensive range of services which are customized to the needs of prospective international or domestic investors. The major benefits to both the site operator or owner and the investor are shared site overheads for increased cost effectiveness. Chemical parks offer a wide range of flexible business models which are attractive for potential investors. Subject to their individual requirements, investors can simply buy or lease land from the site owner in order to establish their own production unit. At the other end of the scale, the business model might consist of a site operator investing in and operating new plant for the investor on a custom or toll-manufacturing basis.

Chemical Infrastructure: Pipeline Network

The major chemical carbon source, crude oil, is distributed by an advanced net of pipelines. Twelve refineries (with a total capacity of about 100 million tons per year – equivalent to 3% of global capacity) and eight steam crackers supply Germany’s chemical industry with all of the necessary building blocks. Of the 145 million tons of chemicals transported annually in Germany, 36% are transported by pipeline. Major chemical sites are interconnected through pipelines that transport raw materials such as ethylene within the country and via Belgium and the Netherlands to neighboring chemical production centers and Europe’s northwestern seaports. There are also hydrogen, carbon monoxide and oxygen pipelines between chemical parks with a specialized production focus.

Energy Security: Low Power Outages in the World

The security of Germany’s electricity supply is very high by international standards. In marked contrast to the US and other countries in Europe where major blackouts are recurrent, power outages are definitely the exception in Germany. The average amount of time lost to blackouts in the US is nearly four hours per year and in Spain two hours per year. Italy and the UK suffer from outages of around 80 minutes per year. However, these all exceed the German average of just 40 minutes per year.

Research & Development: Cutting-Edge Infrastructure

About 22,000 employees work in the German chemical industrial R&D units with annual industry R&D expenditure amounting EUR 4.6 billion. Industry R&D efforts are complemented by institutional R&D. Publicly funded research units of the Max-Planck Society, the Frauenhofer Gesellschaft, the Helmholtz Association, and the Leibniz Association undertake R&D in close cooperation with the industry; often taking place within Germany's unique chemical cluster network infrastructure. The unique combination of industrial and institutional R&D represents an immensely valuable source of capacity for international companies. Thanks to institutional research’s privileging of practical expertise, project-oriented cooperation between industry and institutions is commonplace – ensuring that Germany's chemical industry remains at the international cutting edge.

Workforce and Training: Unique Training System

Germany's chemical industry has a highly trained workforce of more than 360,000 employees. As in other German industry sectors, a unique training system provides the industry with skilled workers according to the company's needs via the vocational or “dual” training system. This enables young employees to specialize on chemical laboratory work, product development or production from the age of 16 onward. This system is accompanied by bachelor and master programs in chemistry offered nationwide (about 50 universities offer classical master degrees in chemistry supplemented by chemical engineering, biochemistry etc.). As well as this, 14 universities of applied sciences offer programs in chemistry. The combination of vocational and advanced training is pivotal to the success of the German chemical industry.

Please contact us for more information on the German chemical industry or for an individual project assessment.

Register for Germany Trade & Invest's Callback Service