German Innovation Survey 2006 – German Automobile Industry Spends the Most on Innovation

The innovative strength of the German economy is crucial for the international competitiveness of German companies. However, the latest available figures show that in 2005, the innovation activity of German companies considerably varied according to the different branches.

The lowest share of companies that successfully introduced innovations was recorded in the transportation sector, postal services and wholesale (27 per cent) and the highest in the chemical, pharmaceutical and mineral oil sectors (80 per cent). Spending 27.5 billion euros on innovation, the automobile industry leads in innovation expenditure. At 56 per cent, it also recorded the highest proportion of revenues generated with product innovation whereas the mining sector brings up the rear with only two per cent. These are the findings of the German Innovation Survey 2006 conducted by the Centre for European Economic Research (ZEW), Mannheim, on behalf of the Federal Ministry for Education and Research and in cooperation with the Fraunhofer Institute for Systems and Innovation Research as well as infas – Institute for Applied Social Sciences.

Regarding the share of successfully innovative companies of an entire branch, the electrical industry at 77 per cent was narrowly defeated by the chemical industry at 80 per cent in 2005. These two top innovators are closely followed by mechanical engineering and instrumentation technology (73 per cent) as well as the IT and telecommunications branch (72 per cent). As in the preceding years, the chemical industry represents the largest proportion of companies that constantly carry out research and development (R&D) at 53 per cent. Runners-up are the electrical industry (50 per cent), instrumentation technology (45 per cent), mechanical engineering (43 per cent) and IT/telecommunications (41 per cent).

In terms of the absolute innovation expenditure, the automobile industry has been first in place for many years. In 2005, the sector spent 27.5 billion euros on innovations. The expenditures did not just include research and development costs but also investment in process innovations as well as the costs of further training, marketing, design and construction for new products and procedures. The runner-up branches are the electrical industry (13.1 billions), chemical industry (11.3 billions), mechanical engineering (9.5 billions) and IT and telecommunications services (8.2 billions). Spending 7.2 billion euros, the financial intermediation and insurance sector has meanwhile recorded a high volume of expenditure on innovations as well.

At 8.8 per cent, instrumentation technology has the highest innovation intensity, i.e. the proportion of innovation expenditures of the sector’s overall sales. The automobile industry, electrical industry as well as technical and R&D service providers each spent 8.3 per cent of their total sales on innovation projects. However, branches like IT/telecommunications, mechanical engineering, chemistry/pharmacy/mineral oil, trail far behind regarding innovation intensity. The financial intermediation and insurance sector has only reached a value of 0.8 per cent.

In 2005, the automobile industry generated a turnover of 186 billion euros by selling new products and thus kept outstripping all other branches. This sector represents 28 per cent of the overall sales gained through product innovations in German economy. In connection with the overall turnover of the automobile industry, product innovations make up 56 per cent – again a peak value. Furthermore, the financial intermediation and insurance sector, electrical industry, mechanical engineering, chemical industry and wholesale generate high absolute turnovers. While in the electrical industry (43 per cent) and the mechanical engineering (32 per cent) product innovations largely contribute to the overall sales, the absolute innovation sales make up only 15 per cent of the total revenue in the chemical industry, 12 per cent in banks and insurances and just six per cent in wholesale.

The electrical industry and IT/telecommunications are the branches that most successfully launched process innovations in 2005 regarding cost savings; the automobile industry and instrumentation technology successfully increased sales due to an improved product quality. Next to the innovation-intense sectors, other branches were able to yield significant results in terms of rationalisation thanks to process innovations. The metalworking industry, mining sector, rubber and plastics processing, banks, insurances and business services each managed to save more than four per cent of their unit costs by introducing new processes.

The German Innovation Survey

Since 1993, the Centre for European Economic Research (ZEW) has conducted an annual survey about innovation activity in the German economy. The German Innovation Survey is conducted on behalf of the Federal Ministry of Education and Research. In the 2006 survey, more than 20,000 businesses representing industry (manufacturing industries, including mining), knowledge-intensive services (computers and data processing, telecommunications, technical services, research and development, business services, advertising, banking, and insurance), other services (wholesale, transportation, postal services, cleaning, security, employment agencies, other business services, waste disposal), energy and water supply, and the media sector.

Contact

Dr. Christian Rammer, Phone: +49/621/1235-184, E-mail: rammer@zew.de