Structural change in German industry — a market analysis

German industry is going through a far-reaching process of transformation. Rising energy costs, tighter regulatory requirements, geopolitical upheaval and the demands of decarbonisation are forcing numerous companies to relocate their sites, reduce production or close plants entirely. Industry's share of gross domestic product has fallen continuously since reunification.

• Industry's share of GDP: down from over 30 % (1991) to under 20 % (2025)
• Employment in manufacturing: a marked decline since 2018
• Investment ratio: falling, with increasing relocation abroad
• Energy-intensive industries: particularly hard hit by the rise in energy prices

Not all industrial sectors are equally affected by structural change. Energy-intensive sectors are under particular pressure, as are sectors facing intense international competition and low margins. The following overview shows the sectors with the greatest need for dismantling.

• Steel industry: blast furnace sites are being given up in favour of electric steel plants, with extensive dismantling projects at traditional ironworks locations
• Chemical industry: closure of plants with outdated technology, high demands on hazardous-substance remediation and soil decontamination
• Automotive suppliers: the transformation to electric mobility is making sites for combustion engine components obsolete
• Coal-fired power stations: the politically agreed coal phase-out by 2038 means numerous sites have to be dismantled
• Refineries and petrochemicals: declining production of fossil fuels, complex dismantling projects
• Textile industry: long-term structural change, with many legacy sites requiring remediation
• Glass and ceramics industry: site closures driven by energy costs, with refractory linings as a dismantling issue

The causes of the transformation of the German industrial landscape are multi-layered and act cumulatively. No single factor on its own explains the change — it is the combination of cost pressure, tighter regulation and a changed global competitive situation.

• Energy costs: industrial electricity prices in Germany are two to three times higher than in the USA or China
• CO₂ pricing: EU emissions trading (EU ETS) and CBAM are making energy-intensive production more expensive
• Bureaucracy and permitting procedures: long planning times, high compliance costs
• Shortage of skilled workers: particularly in technical occupations and in structurally weak regions
• Geopolitical risks: dependency on supply chains, decoupling of markets
• Decarbonisation: the investment required for climate-neutral production exceeds the capital base of many companies
• Technological change: digitalisation and automation call for new site concepts

The closure of industrial sites has far-reaching consequences that go beyond the immediate loss of jobs. Local authorities lose trade tax revenue, suppliers lose orders, and derelict sites are created that cannot be put to new use without professional preparation.

• Loss of jobs and of regional purchasing power
• Shortfalls in trade tax revenue for the local authorities affected
• The emergence of industrial brownfield sites suspected of legacy contamination
• Damage to the image of the site and the region
• Deterioration of infrastructure: works railway connections, utility lines, roads

Former industrial sites offer considerable potential for economic reuse. As a rule they already have transport links, utility infrastructure and the planning law prerequisites for commercial or industrial use. Revitalising brownfield sites is also a contribution to conserving land and protecting agricultural land.

• Location advantages: existing servicing (road, rail, water), grid connections, planning status
• Sustainability advantage: reuse instead of sealing new greenfield land
• Funding: the federal government and the states support the revitalisation of brownfield sites and the remediation of contaminated land
• Demand: commercial sites in serviced locations are scarce in conurbations
• Increase in value: the difference between a contaminated plot of land and a remediated site is the economic driver