Despite all the uncertainties around the world, electronics exports had their third record-breaking year in a row in 2016. But now 2017 is supposed to be a year of strategic alignment.
The 846,000 employees in the German electronics industry appear to be doing plenty of things right. The fruits of their labor are coveted at home and abroad alike. In December of last year, exports increased by 9 percent over the previous year to 15.2 billion euros—the highest December value ever. There was double-digit growth of 12.9 percent in January, followed by 2.6 percent in February.
During the whole of 2016, exports climbed by 4.4 percent to an all-time high of 182.1 billion euros. With an increase of 8.3 percent to 16.3 billion euros, China relegated the United States (+2.0 percent to 16.1 billion euros) to second place. After that came France (+0.6 percent to 11.8 billion euros) and Great Britain (+1.7 percent to 10.0 billion euros). Once again, Eastern Europe including Poland, the Czech Republic and Hungary also contributed significantly to last year's results.
Growth through innovation
Industry revenues totaled 178.6 billion euros last year. That figure appears to be less than exports because the figures on which they are based measure different things (see "Information box: Sales, production, export rate, market" in the enclosure). A good 75 percent of sales came from the industrial goods sector (automation, energy technology, electrical installation, medical technology). Intermediate goods (electronic components, semiconductors) accounted for more than 10 percent, and consumer goods (household appliances, lighting, consumer electronics, etc.) accounted for the rest.
These increases did not happen by chance. After all, in 2015 approximately one-fourth of all R&D employees in Germany worked in the electronics industry. In 2016 they accounted for more than 16 billion euros in R&D expenditures—more than one-fifth of all R&D outlays in the private sector. They are also responsible for 40 percent of all transnational patent applications in Germany, making it Germany's most innovative branch of industry.
Prospects for 2017 are good
The prospects for the German electronics industry remain good. The ZVEI is predicting that price-adjusted production in the industry will increase by 1.5 percent to some 182 billion euros this year. That would finally equal the record set in 2008.
Above all, threshold countries including Eastern Asia are offering good business opportunities. In January of this year, exports to these regions increased to 5.2 billion euros, an increase of 15 percent compared to the previous year. The business climate improved significantly in February of this year, following an upward trend for the past six months now.
As far as the global situation is concerned, no one knows exactly how the growing trend toward protectionist thinking—i.e. Trump, Brexit and the elections in France—will affect Germany's domestic economy. After all, nearly 15 percent of its electronics exports go to Great Britain and the United States. However, the industry in Germany is considerably more diversified now than it was in 1990, which is reason to be hopeful. At the time, more than 70 percent of all exports ended up in the ten largest buyer countries, compared to just 57 percent in 2015.
Of course, there are still warnings about the “digital gap” between large corporations and small and medium-sized companies. According to the ZVEI, companies must tackle the challenges of digitalization more actively. In addition, the German Electrical and Electronic Manufacturers' Association and the Federation of German Industries (BDI) are calling for tax incentives of at least 10 percent for research and development expenditures so that manufacturers are equipped to meet future challenges.
ZVEI: „Elektroindustrie in Zahlen“ (PDF)