industrieplatz hessen
 
Hessenboebbel

Concept

Out concerns / Background information

1. What we want

By 2030, we want to develop Hessen into one of the most modern industrial regions in Europe. Hessen has the right foundations for achieving this goal, but it must also take specific advantage of its competitive opportunities with other regions by securing its infrastructure, committing to innovation, and cultivating social acceptance in this respect.

In contrast, for example, to Baden-Württemberg and Bavaria, Hessen is not strongly associated with industry and does not host the headquarters of major companies, with a few exceptions such as Fresenius, Merck, Adam Opel, Kion, K+S, Heraeus and Schunk. However, Hessen is strong in some sectors and branches of industry, which employ significant numbers of workers:

The metals and electronics industry (from machine manufacturing to automotive, electronics, and optics) employs 210,000 people. Around 115,000 work in the chemical and pharmaceutical industry, including related businesses, and around 80,000 work in the information and communications industry. Beyond that, Hessen has wide-ranging competencies in the service sector, and an above-average proportion of service-related business.

This is due mainly to two factors that contribute to its stability: the banking centre with approximately 70,000 workers and the mobility and logistics sector with just under 80,000 workers at Germany’s largest place of employment alone – Frankfurt Airport.

These sectors, however, cannot simply be lumped together as services. Rather, value is largely created as a specific result of collaboration and the integration of these competencies to form a comprehensive package. Industrial products require not only logistical distribution – almost always throughout the entire world – but often also financing and, increasingly, integrated software in order to derive ‘learning’ products.

Above all, it will be the intelligent integration and networking of these competencies that offer Hessen the chance to become a leading location for new and highly modernizing industry, which

  • succeeds in integrating industrial production and closely linked services through exemplary networking,
  • promotes the integration of industry and software through such networking, i.e. Industry 4.0,
  • develops, in a particularly networked and innovative manner, solutions addressing the global megatrends of resource scarcity and climate change, health and nutrition, communication within an information society, and demographic change,
  • contributes to the solution of the megatrend of urbanisation by bringing together the industrial needs of growing cities with an industry that supplies infrastructure and exports globally, and
  • creates people-friendly and sustainable solutions as a result.

 

What kind of integration would be indicative of a ‘new industry’ in Hessen, for example?

  • Integrating a health care industry with industrial standardization and quality customized health solutions – which also contributes to a reduction in costs for the health sector financed by social insurance.
  • Integrating industry with the energy revolution by funding research for new storage technologies, such as the strengthened commitment to research in the area of fuel cells (link to the PPP research agreement with the EU).


This list is neither complete nor is it easy to predict the outcomes. Not all of the plans for these projections will come to fruition. However, if Hessen is looking for realistic opportunities, they are predominantly to be found in the realm of these new fields of activity.

Hessen will also need a common will from the political, business and social sectors in order to focus and further develop infrastructure and an approach to subsidization. And a shared commitment by stakeholders is needed, to set goals and to promote their realisation.

The first step in this direction is for the community to come together to develop a concept for Hessen as a place of industry. This concept should be both:

  • a commitment to strong and modern industry in Hessen and
  • a guiding principle for the additional optimization of the industrial location.

2. Where we have come from and what we have learned along the way

As a place of business, Germany (in which Hessen is embedded) has demonstrated a comparatively high level of stability throughout the recent crises. This is mainly due to the relatively high percentage of gross value added accounted for by industry, compared to other European countries.

If this high percentage of industry was originally a reason for the temporarily sharp slump as the crisis broke out, the industrial sector proved its structurally central role as the stabiliser of prosperity and employment while the crisis was subsequently being managed. This can be attributed to the high degree of competitiveness of German industrial products, which was also boosted by an average 2.2 per cent reduction in unit labour costs between 2000 and 2007.

This development also benefited from the single European currency. Had there been a national currency, a revaluation would have had a significant effect on Germany’s competitiveness. Conversely, following the crisis, German industry was able to profit from a drop in the effective exchange rate of the euro, which again improved the competitiveness of products from the euro zone.

Over the past 15 years, the percentage of Germany’s gross value added accounted for by industry has been largely maintained. Within the context of continuous growth in the gross national product, this percentage of industry has been clearly observed and has even grown. This growth has been maintained primarily by the very positive development of export-oriented industry.

This accounts for exports from manufacturing between 1995 and 2010 growing markedly faster than the creation of value. Along with these direct effects, industry acts as an initiator for value added chains far beyond this sector, which include many branches of other sectors.

What applies to Germany applies also to the industrial location of Hessen. Notwithstanding the powerful service centre in the Rhine-Main region, industrial value creation plays a central role in Hessen. In 2010, the percentage of value creation attributed to manufacturing (not including mining) was 17.7 per cent in Hessen (22 per cent in Germany).

An additional percentage of value creation of over seven per cent is connected with preliminary and ancillary services, meaning that the value created from industry and industry-related services is arguably close to a quarter of Hessen’s entire gross value added. [1]

In the past few years, the following observation of the industrial sector regarding industrially manufactured products has become more common: Industrially manufactured products that are not one-off consumables are attributed to the industrial sector. Based on this classification, over 40 per cent of workers work in the industrial sector.[2]

The success of industry in Hessen that has been enjoyed until now will not simply continue on its own. Globalization in recent years has also put significant competitiveness pressures on places of industry. Emerging economies, in particular the BRIC nations, have shifted their position within the world economy and are no longer limited to the role of suppliers of raw materials and simple products.

Their desire to achieve ever higher levels of value creation – sometimes using protectionist measures – continues unabated and their development is dynamic. Thus an increasing number of dedicated, high-quality manufacturing locations are being created with high degrees of internal networking and cluster building, to enable the development and manufacture of more sophisticated products.

Within this climate, developed and upscale industrial locations such as Hessen only have a chance to maintain their level – or even to improve it – if they take it upon themselves to constantly develop and expand their knowledge-based value creation activities.

To this end, Hessen requires the proper conditions for a place of industry. Such conditions should have the effect of enhancing the innovative power of businesses operating in the fields of technology, organization and marketing, promoting the application of the latest trends in industrial production, and supporting the networking of industries amongst each other, as well as with science and the service sector.

Hessen’s opportunities as a place of industry are bolstered by its current positive position as a place of research, the broad spectrum of industries already represented – including leading industries such as chemical and pharmaceutical, as well as metals and electronics – and the high percentage of industry-related services.

Without the ballast of major conversion activities resulting from structural changes – such as those which the Ruhr region of Germany have gone through – the location’s central location in Europe and its strong position within the field of infrastructure makes it predestined to find an excellent position as the world economy shifts. Hessen has the potential to be a leading supplier and this chance cannot be passed up.

1) Calculation based on 2006: numbers for Germany are already available for 2007 in more recent studies and indicate a growing percentage.


2) Smart Industry: a new industrial perspective. Results of a study by Institut der deutschen Wirtschaft Köln Consult GmbH for the State of Hessen 2012, pp. 48–51

 
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