Industrial research - an overview

Industrial research overview

Inventive and innovative: Germany is home to some of the world’s top research companies. They run their own research institutes, establish research associations and cooperate with universities and research institutions all over the world. And they do so with striking success.

Finding solutions is one of the real strengths of German industry. Whether it is a question of developing self-driving cars or creating applications for artificial intelligence in medicine – German companies are among the world’s most innovative inventors.

Research and development (R&D) plays a key role in German industry, and major corporations such as Bosch, Siemens and BASF are among those firms that register the most international patents worldwide. Research-based companies in Germany spend nearly 63 billion euros on R&D, which makes German industry one of the most research-oriented in the world.

  • Approx. 451,000 R&D personnel (2018), including 236,000 researchers (2016)
  • R&D expenditure by the private sector as a proportion of GDP: 2.2% (2018)
  • Annual budget for R&D: approx. 72.1 billion euros (2018)

The largest investments are made by the automotive sector: carmakers and their suppliers spend almost 22 billion euros on research and development. That is over one third of the total R&D investment by German industry. Accordingly, this is also where the largest number of people are employed: almost 114,000 employees work in R&D for the automotive engineering sector.

Electrical engineering companies also present a strong research effort. They spend almost 10 billion euros on R&D and employ nearly 83,000 people in the research sector.

The German mechanical engineering sector is also strong in research: companies here invest almost 5.7 billion euros and employ 45,000 R&D personnel.

It is not only the big household names that are researching for the future, however. The "Weltmarktführer-Index” (World Market Leader Index) complied by the HBM Unternehmerschule at the University of St Gallen lists 530 champions in Germany – for example, technology firm ZF Friedrichshafen AG. An automotive supplier, it is one of the companies that files the most patents with the German Patent and Trade Mark Office. This is hardly surprising given that ZF Friedrichshafen spends more than 6per cent of its annual turnover on research and development.

Family-owned Schaeffler is also a hidden champion in its market segment, predominantly because of its research activities. Almost 8,000 R&D employees carry out research in 20 research centres around the world. This industrial supplier invested 847 million euros in future technologies and knowledge transfer in 2018. Among other things, the company develops lowfriction bearings for wind turbines and paves the way for industrialised fuel cell technology.

Largest Family Companies
Largest Family Companies

In Germany, family-owned enterprises are not the exception, but the rule: over 90 per cent of the private sector is family-owned. One glance at the numbers shows just how important this type of enterprise is for Germany:

  • Over half of all employees (57%) in the private sector work in family companies
  • Family-controlled companies generate over half (55%) the total turnover of all private businesses

Most of these family companies tend to be small or medium-sized: just under 99 per cent of family companies have fewer than 50 employees.

Nevertheless, their economic strength is enormous: if you add together the sales of the 1,000 largest German family companies, you come to a total sum of 1.85 trillion euros (2017). German family-owned companies employ nearly 7.7 million people worldwide.

Family-controlled companies also stand out when it comes to research and innovation: 6.1 per cent of turnover is invested by the 1,000 largest family-owned companies, 44per cent of them play an active role in research partnerships and 62 per cent cooperate with universities.

Industrial giants should not be the only companies able to try out their ideas and put them into practice. That’s why there are extensive funding structures, supported with taxpayers’ money, that provide SMEs support in research and development.

The most powerful of these is definitely Industrial Collective Research (IGF), a unique programme that provides targeted support for small and medium-sized enterprises. As a rule, they are unable to afford to carry out research on their own. The goal of the IGF programme is to build a bridge between basic research and commercial applications with the aid of joint research.

This is how it works: small, medium-sized and even large companies and business organisations – over 50,000 of them are now involved – join together in research associations for their respective industrial sectors. These in turn organise research projects that are suggested by their members and cover all relevant technologies of the future – from biotechnology to new materials to efficient use of resources. A third of these research associations maintain their own research institutes especially for this purpose.

The effectiveness of this research service for industry, and especially for SMEs, is based on cooperation: 100 different research associations work together under the umbrella of the German Federation of Industrial Research Associations (AiF). The AiF coordinates and organises pre-competitive joint industrial research.

This research support for SMEs is financed by the German Federal Government: the AiF collects over 180 million euros of public funding a year for IGF, and almost 23,000 companies were involved in research projects in 2018 alone.

Ultimately, everyone benefits: the results of IGF projects are published and made available to all companies.

Although the Industrial Collective Research (IGF) is a very large publicly funded programme for SME research projects, it is not the only one. Another large project is the Central Innovation Programme SME, also known by its German acronym, ZIM. The funding agency here is also the AiF. Almost 300 million euros were made available in 2018.

Unlike IGF, which finances pre-competitive application-oriented basic research, ZIM provides funding for individual and collective R&D projects by SMEs and non-profit research institutions. Some 3,300 companies and almost 1,000 research facilities were able to benefit from this support in 2018. Roughly 7,000 R&D projects received funding as a result.

“Strengthening SMEs”


Interview with Dr.-Ing. Thomas Kathöfer, CEO of the AiF

What makes the AiF special?

The AiF’s mission is to boost the innovative capacity of SMEs. Working with the Federal Ministry for Economic Affairs and Energy (BMWi), it does so by supporting their cooperation with research institutions through two research funding programmes: Industrial Collective Research and the Central Innovation Programme SME. This allows companies to keep their products competitive by drawing on current scientific knowledge.

How would you describe the AiF’s significance in terms of research in Germany?

The AiF is the cooperation and transfer platform for German SMEs. More than 50,000 actively researching SMEs and 1,200 departments at research institutions (university chairs, institutes etc.) are currently members of the AiF’s network.

How important is the next generation of scientists for industrial research in Germany?

Young scientists are vital when it comes to industrial research. Projects in Industrial Collective Research in particular play a key role here: young scientists are involved in every project – many of them later switch to small and medium-sized enterprises.