Episode 25: Top German Business Stories of 2024 – A Year in Review

While GDP may have stagnated, foreign direct investment continued apace in Europe’s largest economy. 2024 was a banner year for German pharma and artificial intelligence. The world’s largest IT companies invested heavily in data centers, and the government further relaxed entry regulations for international professionals with sought-after skills and launched massive infrastructure projects to provide the country with green energy. INTO GERMANY looks back at the year that was.

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Our year in review features leaders from business and politics and Germany Trade & Invest experts from a variety of fields.

Transcript of this episode

[Christmas jingles]

Presenter:
Yes, it’s that time again! 2024 is coming to an end, which means: festivities, cozy get-togethers and… year-in- reviews. Over the past twelve months, we went to the gym, put the German pharma industry under a microscope and took a spin through the driverless future of autonomous vehicles. Now we want to look back at some of the biggest stories.

Welcome to INTO Germany, the German business podcast, brought to you by the international business promotion agency Germany Trade and Invest. I’m your host Kelly O’Brien.

[once more Christmas jingles]

Presenter: 

2024 got off to a bumpy start. Business forecasts were a bit gloomy, there was a federal budget dispute, and structural challenges and global factors slowed the German economy. And indeed, some sectors of the German economy could only tread water. But foreign direct investment was a major bright spot. That was because international companies’ confidence in Germany remained high.

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In mid-February, software colossus Microsoft announced a multi-billion-euro investment in Germany. The US company said it will spend around EUR 3.2 billion on its artificial intelligence business in the coming two years. It’s the largest sum ever allocated by the company in Germany in forty years of doing business here.

Microsoft President Brad Smith said that this investment will double the company’s infrastructure and cloud capacity „to meet the country’s accelerating demand for AI services.“ Germany ranks second in the world in terms of usage of AI by organizations and is the second leading developer of AI applications in Europe. But, as Smith pointed out, the country only ranked eleventh in AI capacity. So that means business opportunities – as Germany Minister for Economic Affairs and Climate Action Robert Habeck told news channel ntv:

Robert Habeck:

There’s a lot to come, but you can see a new dynamism, beginning with start-ups, where we’ve done a lot for financing. Big companies, too, have discovered AI. In planned usages, we’re seeing nearly exponential growth over previous years. For that reason, from month to month and year to year, there will be a lot going on in Germany.

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[sound element: factory/people at work]

Presenter:
One of the major challenges facing the German economy is the need for skilled workers. German politicians have recognized the problem and gradually relaxed the entry regulations for international professionals with sought-after skills. Let’s hear from Germany Trade & Invest CEO Robert Hermann.

            Robert Hermann, GTAI CEO

The need to ensure sufficient skilled labor is a problem faced by all the world's leading economies, we know that very well dealing with companies as foreign investors that are interested in investing in Germany that tell us that they faced similar problems in neighboring countries. So Germany is keenly aware of this and is engaged in a major overhaul of immigration reforms, especially targeted at people with skills in high demand.

Presenter:
One particularly important change came into force in spring 2024. As of March 1, Germany has introduced new support measures mainly focusing on the recognition of foreign professional qualifications. A so-called EU Blue Card has already been in place since November 2023. The new „recognition partnership“ will allow applicant qualifications to be recognized upon entry into Germany. This means that the employee can take up qualified employment from day one.

Tax and legal expert Christina Schön explains:

Christina Schön, Senior Manager Tax & Legal Services at GTAI

Residence regulations are very important when planning an expansion. The Reformed Skilled Immigration Act will have a positive impact for companies setting up in Germany. It will be easier for them to bring their employees with them and also to attract talents from outside the EU in general.

Presenter:
Conditions include at least two years of vocational training or a university degree which must be recognized by the issuing country. Candidates also need A2 level German language skills. Formal recognition of a skilled employee’s foreign qualification will no longer be necessary in some cases. Some IT specialists – with at least two years of professional experience - may even access the German labor market without any professional qualification.

In addition to relaxed entry regulations, the country offers assistance for interested workers – such as…
 

Alexandra Köbler, immigration assistant at „Make it in Germany“ 

Make It In Germany is the German government official and multilingual platform on the topic of skilled labor migration. It also serves as communication platform for the Skilled Immigration Act. It covers topics like visa, job search or everyday life in Germany and supports through services such as webinars, checklists, job listings, or personal counseling through the hotline working and living in Germany. The aim of the portal is to inspire international talents worldwide to live and work in Germany and to support everyone involved with the needed knowledge and tools.

Presenter:
That was immigration consultant Alexandra Köhler from Make it in Germany. Further amendments of the Skilled Immigration Act came into force in June 2024, such as the introduction of a job search opportunity card that enables jobseekers to stay in Germany to look for employment.

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[sound element: beeping noises from hospital]

Presenter: 

2024 was a BANNER year for pharmaceuticals in Germany, starting with a multi-billion euro investment announced in February. Japanese pharmaceutical giant Daiichi Sankyo is expanding its Pfaffenhofen location in southern Germany into an international innovation center, which will bring leading international researchers, engineers and bio-technology experts to the Bavarian town.

GTAI chemicals and health director Marcus Schmidt is not surprised by the international interest in the German market:

Marcus Schmidt, chemicals and health director at GTAI

Germany is the fourth largest pharmaceutical market worldwide, after the US, China and Japan. And that indicates it's by far the largest market within Europe. So when you look at the numbers, uh, the number of medications available per country, again, Germany comes out on top. And that's a major factor. And final point. Medications are made available very quickly in Germany. It only takes about 50 days on average from approval until a patient actually has access, while the EU average is about 500 days, so ten times as long. And that's because in Germany there's a parallel process for price negotiations, while in most other countries they first negotiate about prices and then decide whether to introduce a drug or not.

Presenter: 

And another pharma giant is expanding to take advantage of Germany as a business location. America’s Eli Lilly and Company announced that it would invest USD 2.5 billion into a state-of-the-art production facility in Alzey in Western Germany. It is the biggest investment the company has ever made in Europe. Gerd Kräh, from Eli Lilly Germany explains what makes the market so attractive:

Gerd Kräh, Eli Lilly

Germany inside the European Union, is still a highly attractive place for us from a perspective of a pharmaceutical industry, because Germany has quite a heritage so known in the former times as the cradle of the pharmaceutical industry was big players as you may be aware of. And so at the end of the day, if you are cutting down the decision tree, we thought Germany is a good place for investments and therefore we went to GTAI and asked for their support. If it's possible to find a proper place and this is where we are right now.

Presenter:

So pharma in Germany is in good shape. But what about foreign direct investment in general?

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[sound element: coins dropping]

Presenter: 

Despite sluggish growth overall, foreign direct investment was at an all time high in 2023. That was the key finding of GTAI’s annual FDI study, which was published in May. It revealed that the VOLUME of international business expansions to and in Germany went up 37 percent between 2022 and 2023. For comparison, according to data from fDi Markets, foreign direct investment was up 2.6 percent worldwide, whereas it decreased by 7.4 percent in Europe. 

Germany attracted EUR 34.8 billion worth of international business projects. GTAI’s Robert Hermann:

Robert Hermann, GTAI CEO
 

… that says we have entrepreneurs, we have innovation, we have innovative people that have the strengths to invest or to establish companies, to make out of ideas businesses. And not only in digital economy also in deep Tech so there are a lot of opportunities and I’m very confident that this is a good sign for Germany.

Presenter:
Apart from digitalization, major investments were announced in the areas of healthcare and life sciences, energy and resources, electronics and automation and mobility and logistics. International companies remain optimistic when it comes to business investments in Germany. An important indicator in this regard is the FDI Index drawn up by consultants Kearney. It surveys global investors around the world with more than 500 respondents – all coming from companies that are valued at least USD 500 million. Terry Toland is a co-author of the index:

Terry Toland, Kearney

The bottom line is that we saw what we call a "cautious optimism" among investors this year. There was an increased interest in the most developed markets of the world. A sense of a flight to safety to some degree. And the perceived safety of developed markets over emerging markets. 

Presenter:
In 2024, Germany ranked among the top five in Kearney’s list of investor confidence.

Terry Toland, Kearney

Generally over the long history, the 25-year history of the index, we find that investors are somewhat less concerned about shorter term economics, ups and downs and what they might see as a blip in the economy. They're more concerned about longer term stability, issues of trust. They're really looking for places that they see as being free of corruption, are home to trustworthy institutions, strong R&D investments and innovation capacity, reliable infrastructure and skilled workforces. And when you start looking at these metrics, Germany does quite well. 

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[sound element: wind turbine]

Presenter:

In May, work started in Germany on a massive British-German “Energy Highway”. NeuConnect – as the project is called – will help link the grids in Europe’s two largest energy markets, Germany and the UK. The overall project, planned to start operation in 2028, comes at a cost of EUR 2.8 billion and will allow 1.4 gigawatts of electricity to flow in both directions. It will be one of the world’s largest interconnectors, encompassing some 725 kilometers of land and subsea cables.

Rob Compton Energy, Building and Environmental Technologies, GTAI

With growing amounts of fluctuating renewable electricity in the grid, interconnectors are becoming a really important technology. They allow power trading between national grids. Within Germany itself we are also building a lot of HVDC lines, especially form the north down to the south and that brings opportunities with it for international companies such as engineering officers, construction but also for component manufacturers.

Presenter:
That was energy expert Rob Compton. Interconnectors are also a crucial element on Germany’s way to carbon-neutrality. According to operators, the NeuConnect interconnector will reduce carbon emissions by more than 13 million tons over the course of 25 years.

No wonder, that the British-German energy highway is just one of several interconnectors being built in Europe. Marco Nix, CFO at Fifty-Hertz, one of four German grid operators, explains:

Marco Nix, CFO at grid operator Fifty-Hertz

I think the German energy sector is one of the most open compared to other countries in Europe. And our example is a good one as, our mother company is a Belgian based holding company which is listed on the Bel 20. So comparable to Dax 30. And this is giving an idea how open Germany is in attracting foreign capital on one hand and connecting to other countries and that’s something we are forcing as well, that we try to connect ourselves with other European countries to, on one hand, increase security of supply. Secondly, get access to renewable energy sources in these countries which might have excess of that. And thirdly, have a mesh grid to enable the kind of European market on electricity. And that requires quite a lot of connections to other countries.

Presenter: 

Ok, so there was a lot going on in energy distribution in Germany in 2024. Now let's have a look at energy CONSUMPTION.

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[sound element: computer voice saying „transfer of data completed“]

Presenter:

One reason power trading between national grids and regions is so important is because we are now storing data in clouds, and cloud services need lots and lots of power. One of the biggest players on the market is Amazon with its Amazon Web Services. In June they announced they would invest several billions to expand their German cloud infrastructure. Amazon says that this business investment will add EUR 17.2 billion to the German GDP by the end of the coming decade. Michael Hanisch, Head of Technology at AWS, said:
 

Michael Hanisch, Head of Investments, AWS

We are celebrating our 10-year anniversary for the AWS region in Frankfurt and we're not only celebrating our own success but also all the things that our customers have managed to build to develop and to innovate on this infrastructure.

Presenter: 

The AWS project adds the eastern German regional state of Brandenburg and the greater Berlin area as a second German cloud computing hub along with the country’s financial center Frankfurt. Amazon is just one of several companies that have recently invested in eastern Germany. Silke Poppe, who oversees the eastern German states at GTAI, explains why:

Silke Poppe, GTAI

Let’s look at some of the advantages Eastern Germany has. Thanks to its excellent educational system it has a highly skilled workforce. Yet it also has an attractive cost and wage structure. The quality of life in the East is high, so recruiting employees is generally not a problem. There's also far more available land in the East than in the West, and it offers easy access to the economies of Eastern Europe, and there are abundant supplies of renewable produced energies. Add to that the many avenues of government support for companies that extend to the regions of Germany undergoing structural change.

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[sound element: spherical sounds]

Presenter: 

So, we've arrived at the height of summer in our review of the biggest German business stories of 2024. And once again the focus is energy. In July  Germany officially kicked off 23 European hydrogen projects. The initiatives are part of the third stage of the Hy2Infra, an „Important Project of Common European Interest.“ It was jointly prepared and submitted by seven Member States. Besides Germany, these were: France, Italy, the Netherlands, Poland, Portugal and Slovakia. 

In total, there are more than 30 companies involved. One of them is OGE – it’s the largest of Germany’s 16 gas transmission grid operators. Niko Bosnjak, OGE’s head of policy and communications says:

Niko Bosnjak, OGE’s head of policy and communications

You can’t reach the climate goals without hydrogen. That's pretty much a fact. We have done a lot of good work in Germany in green electricity generation. Hydrogen offers a bridge to save the electricity that you produce in the summer and make it available in the winter, because gases in general, but hydrogen in particular, they can be stored in very large volumes, but they can also be transported in very large volumes and over long distances. The gas networks are very well integrated across all of Europe. We're really at the heart of Europe at OGE. We have a total of 17 border crossing points. We do a lot of transit, there's a lot of gas coming into our grid that doesn't even stay in Germany, that we just transport to other European countries.

Presenter:
In total, Germany’s national and regional governments are putting EUR 4.6 billion into the projects which will cover a large part of the hydrogen value chain, including hydrogen generation, storage, infrastructure and distribution. 

The goal of all these projects is a national hydrogen grid, starting with a core network capable of creating around 1.4 gigawatts of green hydrogen capacity:

Raphaël Goldstein, GTAI

It’s a huge investment opportunity for international companies. It’s about 20 billion euros and it spans over 9.700 km. So for all company that produce, transport or use hydrogen it's great, because they can use the network for the supply chain. It’s also for all the companies that are willing to export hydrogen, the possibility not only to export to Germany but also to use this network as a gateway to neighboring European countries.

Presenter:
… explains hydrogen expert Raphaël Goldstein.

[sound element]

Presenter:
In August, there was even MORE good news for the German pharmaceutical industry. After Eli Lilly and Daichi Sankyo, French firm Sanofi – one of the world’s leading producers of insulin – announced a EUR 1.3 billion expansion of its BioCampus in Frankfurt. The site will grow by around 36,000 square meters – the equivalent of five football fields. 

Marcus Schmidt says that the German national government’s new pharma strategy bolstered support for companies, streamlining approval procedures and improving conditions for research and development in Germany.

Marcus Schmidt, chemicals and health director at GTAI

The national strategy includes more than 40 measures aimed at improving Germany's competitiveness. First, I would say, there are measures to simplify and accelerate the development and approval of pharmaceuticals, of course, without sacrificing safety or quality. Another set of measures aims at the use of data. Germany has a tremendous pool of health data, but so far it's not really accessible and this luckily is about to change. Now, of course, we're talking about anonymous data here. None of this health data can be tracked back to any individuals, but this can really be a game changer. Other countries have served as a great example. They make the data available, too. But when you think about Germany's size and the quality of data, this can really make a huge difference in the development of new innovative drugs. And I would say also for more personalized medicine. You know all drugs have side effects. So you want to make sure the right patients get the right kind of medications, so people receive better treatment and suffer from this side effects. Yeah. So luckily in this, legislation is already underway, and hopefully we won't have to wait for too long. And then there are other incentives to stimulate more research and development in general, as well as production in Germany. And finally, there are also mechanisms to evaluate and fine tune the price settings to avoid shortages.

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[sound element: person eating chips]

Presenter:
From pharma to chips: No, not potato chips, computer chips. In August, the Taiwan Semiconductor Manufacturing Company TSMC broke ground on a 10-billion-euro plant in the Eastern German town of Dresden. It’s the first European location for TSMC, the world’s largest chipmaker. The plant will specialize in semiconductors for the automotive and industrial sectors. Production is expected to begin in 2027, with a target capacity of 40,000 chips per month by the end of 2029.

The European Commission has approved EUR 5 billion in state subsidies for the chipmaker to support the construction and operation of the microchip manufacturing plant. The choice of location is no coincidence: The region is known as "Silicon Saxony“ – Germany’s biggest high tech network. Frank Bösenberg is its managing director.

Frank Bösenberg, Silicon Saxony

So we are pretty proud that every third chip that is still being produced in Europe comes from Saxony and even from Dresden, because in Dresden, there are currently five major fabs, or let's say four major and one minor fab. That is pretty unique not only in Europe where we are the undisputed number one, but even globally you hardly find such a concentration of different players that manufacture semiconductors in one single spot. So it's also part of the truth that Europe as a whole is not anymore in a leading position globally. So Europe as a whole has only like 8% global market share. So the objective of Europe to have a market share of 20% until 2040 is – how to say this politely – is very, very ambitious, given the respective money that is assigned to the task in relation to the other regions of the world. So everybody wants to grow its market share. Everybody invests. So does Europe, which is a very good news. Will it be sufficient for reaching the 20%? I don't know. But will the industry grow in Europe, in Germany and in Saxony? Yes, definitely!

Presenter:
The chip industry is not the only one providing food for thought in Germany…

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[sound element: farm animals]

Presenter:
More and more people are cutting down or eliminating animal products from their diets, and the German market for plant-based substitutes is growing like... cats and dogs? Let’s skip the similes.  In September, Swiss start-up Planted, a producer of plant-based meat substitutes, announced the construction of a new production facility in the southern German town of Memmingen. The new site will go operational next year and, in the medium term, produce more than 20 tons of food per day.

Planted has been making its meatless products since 2020 in its primary location in Kemptthal, Switzerland. 75 percent of its exports go to Germany. No wonder, as Jens Tuider from food awareness group ProVeg explains:

Jens Tuider, ProVeg

In Germany, we're quite proud of this, obviously Germany's a bit of a trailblazer here. So according to a market report from, I think 2023, the plant based retail market in Germany is valued at around EUR 1.9 billion. It is the biggest plant based market in Europe ahead of, I believe, the United Kingdom in second place and Italy on third. We can also see, which is quite interesting, that between 2020 and 2022, during the Covid crisis, the German market recorded a growth of almost 42% in that segment, which is very, very unusual. So we see massive growth rates and that has contributed to the fact that Germany is now the biggest market for alternative proteins and plant based eating in Europe. And that is not only for meat alternatives. We can also see it with dairy alternatives. And of course that has led to the fact that production in Germany has almost doubled since 2019. So we see lots of signals both from the demand side and the supply side, that there is a huge interest and the strongest interest we can see all over Europe.

Presenter:
For most people, ecological concerns play a central role in the decision to reduce meat consumption. And of course it doesn't stop at food. Sustainability is a huge business model, as our next story shows…

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[sound element: crumpled plastics]

Presenter:
Also in September, US-Dutch firm Lyondell-Basell began work on a massive plastics recycling plant. The chemicals company – the world’s third largest in terms of turnover – is investing a nine-figure sum in a new milestone facility in the western German town Wesseling near Cologne. The 2.7-square-kilometer plant with an annual capacity of 50,000 tons will be the first facility of that scale for chemically recycling plastics.

German Chancellor Olaf Scholz praised the project as part of Germany’s drive to establish circular economies. According to a recently published study by consultants Roland Berger, Germany leads the world in circular-economy technologies. Whether it’s recycling plastics, batteries, waste-CO2 or old wind turbines. More and more plants are being set up to return discarded parts to the recycling cycle. Let’s hear from expert Nico Brahami:

Nico Brahami, Recycling & Waste Management, GTAI
In Europe, Germany stands out as a prime destination for investors in the circular economy. With its very large population and industrial base the country offers unparalleled access to a vast input market for a variety of waste flows providing companies extensive opportunities to invest in this sector. Germany has also developed a strong legislative framework and impressive innovative capabilities that further promote the development of this industry and together create an ideal environment for circular economy ventures. 

Presenter:
The Circular Economy Act was adopted by the Bundestag back in 2012. This Kreislaufwirtschaftsgesetz, as it is called in German, promotes circular economies and the environmentally-compatible management of waste in order to conserve natural resources and ensure the protection of human health and the environment.

It creates attractive framework conditions for companies like Lyondell-Basell which has developed techniques for extracting elements that previously had to be burned. Those hard-to-recycle flexible plastic waste materials make up the majority of mixed plastic waste from the consumer sector. Transformed into pyrolysis oil and gas, they can be put to good use.

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[sound element: quantum computer]

Presenter:

We’re almost at the end of 2024, but before we say goodbye, we’ll stop by Ehningen. The small town in southwestern Germany hosted a big event in October: The American IT giant IBM opened its first European Quantum Data Center. Hence the noise we just heard: It’s what a quantum computer sounds like in reality. The Ehningen facility is IBM’s second worldwide. It includes two new IBM Quantum Eagle based systems and will soon include a new IBM Quantum Heron based system, which is the company's most powerful quantum chip to date.

These systems are capable of performing calculations that go exponentially beyond the brute force simulation capabilities of conventional computers.

At the inauguration ceremony, German Chancellor Olaf Scholz highlighted that Germany has invested more than EUR 2 billion in quantum computing. In a recent survey of 87 large companies conducted by Germany’s digital industry association Bitkom, three-quarters of respondents said they believe Germany could become a global leader in quantum computing technology. AI expert Asha-Maria Sharma says:

Asha-Maria Sharma, AI expert, GTAI

The quantum industry is taking its next steps towards industrial and real-world applications. The industry sees quantum compacting as a future key technology. A recent study about quantum computing sees a growing number of really realistic business models until 2032 and expects technical standards by then. The IBM quantum data center will strengthen Germany’s industrial base and further develop the quantum ecosystem.

Presenter: 

And of course toward the end of the year came the news that Germany’s leftwing-center-Green government had decided to call it a day and move national elections scheduled for the autumn of 2025 ahead by some six months. Germans will now head to the polls in February to choose a new national government. So expect some change – and some new German opportunities and business stories – in the year to come.

With that we've come to the end of another episode of Into Germany. As always,  if you’re interested in expanding to Germany and benefitting from Europe’s largest market, don’t hesitate to contact Germany Trade and Invest. We’re happy to help you… all at no cost because we’re a government agency. Get in touch at gtai.com. We’re also keen on your opinions, suggestions and questions. Please leave a comment in your favorite podcast app or drop us a line. You’ll find all the details in our show notes.

[sound of Christmas bells]

Presenter: 

On that note - till 2025!  „Frohe Festtage“, “einen guten Rutsch ins Neue Jahr,” “Auf Wiederhören.” And remember: Germany means business.