The industrial sector plays a much stronger role as a driver of growth, prosperity, and employment in Germany than in other countries that share many characteristics with Germany. Over decades, German manufacturers have earned an excellent reputation for providing innovative high-quality products, making the country famously strong in exports. Faced with global challenges, such as climate change, scarcity of resources, urbanisation, and an ageing population in some industrialised countries and emerging economies, the German industrial sector needs to constantly adapt and evolve, which is certainly difficult, but also opens up new opportunities. After all, the industrial sector is absolutely indispensable when it comes to tackling many of the changes brought about by these developments. Industry, with its highly specialised expertise and capacity for innovation, is in an ideal position to help us successfully overcome the challenges of our time.

As for a modern industrial policy, it must be designed around the core objective of creating and maintaining a regulatory environment in which industry can thrive. This means that policy-makers must strongly advocate for a level playing field for domestic companies and their employees as they compete on international markets. A modern industrial policy should also go hand in hand with a strategic and forward-looking policy for innovation. Based on its High-tech Strategy, the Federal Government will be developing a comprehensive, cross-government innovation strategy that will factor in Germany's core industrial capabilities. The objective here is to foster innovation across the board, so that it covers all the lead markets and enabling technologies that are of relevance for Germany. These include mechanical engineering and plant building, materials technology, bio and nanotechnology, energy and environmental technology, mobility and logistics, healthcare and medical technology, and information and communications technology.

For Germany to remain an attractive base for manufacturing and innovation in the long term, it is vital that policy-makers remain just as nimble and ready to respond to new challenges as the industrial sector itself. These are some of the challenges that need to be addressed if our industrial sector is to maintain and further develop its strength in the long-term:

Raw materials and natural resources

Being able to rely on a secure supply of raw materials and energy is absolutely crucial for any manufacturer in Germany. The Federal Government and the private sector fully agree that companies are themselves responsible for ensuring that they have the resources they need. The German Government has been contributing to this effort by adopting a Raw Materials Strategy under which it has taken various supportive measures. However, this cannot change the fact that many raw materials will remain scarce and sought-after commodities that are only available at a high price. This is why it is so important for businesses to act sustainably by using materials and resources efficiently and to thereby tap new potential for growth. The Federal Government has approved a dedicated resource efficiency programme called ProgRess, which promotes energy efficiency by providing market incentives, information and advice, by supporting education and research, and by strengthening voluntary initiatives and measures taken by industry and civil society.

With fossil resources becoming increasingly scarce, bio-economy is gaining importance in the context of industrial manufacturing. Biotechnology is one of the key drivers of bio-based innovation.

Environment and environmental protection

Industry has a crucial role to play when it comes to tackling the economic impact of climate change, improving resource and energy efficiency, and increasing the use of renewable energy. While protecting the environment certainly costs money, it also creates new market opportunities. German companies - above all producers of machinery and plants, measuring and control technology, and electrical engineering goods - have all that it takes to be among the most successful exporters of green-technology products worldwide. They stand to benefit from the move towards green technology and can make an important contribution to tackling environmental challenges.

Digitisation and the knowledge economy

The process of technological transformation and the trend towards sharing knowledge and information on an ever-growing scale will continue at unabated speed. Similarly, new developments in information and communication technology are having a considerable impact on the production of complex goods and services requiring a great deal of research and expertise. It is now increasingly possible for such complex manufacturing processes to be digitally controllable.

In future, there will be new market opportunities based on new developments in satellite communications (HDTV and 3DTV). Despite facing competition from optic-fibre connections and terrestrial mobile networks, geostationary communication satellites will remain the most important technical means of distributing information across vast areas. They can also be used as a complement to terrestrial technologies to provide multimedia, mobile communication and internet services.

Industry 4.0

Given the rampant speed at which information and communications technologies are developing and at which the "internet of things" is emerging, the industrial sector is set to undergo some very profound changes, which are often dubbed the fourth industrial revolution or "Industry 4.0". Highly flexible production methods and logistics will pave the way for products that are customised to the buyer's exact needs. Customers and business partners will be directly involved in operational and production processes, and there will be production methods and products that are closely intertwined with state-of-the-art, knowledge-intensive services (hybrid production, hybrid products). As part of its work to support this development, the Federal Ministry for Economic Affairs and Energy has launched a technology programme entitled "AUTONOMICS for Industry 4.0 - production, products, services in the multidimensional internet of the future".

Demographic change

Demographic change has been happening faster in Germany than in many other industrialised countries. As the German population is ageing, the country's old-age dependency ratio is changing dramatically. This makes it all the more imperative for Germany to embrace lifelong learning, attract skilled immigrants, increase female labour market participation, and to develop HR policies that accommodate the needs of older workers. All this is necessary to ensure a sufficient supply of skilled professionals - one of the key challenges for policy-makers today. At the same time, German companies can also see this as an opportunity to become leaders in the silver economy, for instance by developing products that promote intergenerational equity and focusing their medical and pharmaceutical research on combating diseases of old-age.