Germany's Chemical Parks

Investing in a Unique Range of Economic Benefits

  • © vinz89 - Fotolia.com© vinz89 - Fotolia.com
  • © vinz89 - Fotolia.com
  • Traditional chemical parks such as the sites of former Hoechst AG in Frankfurt (left) or Bayer AG in Leverkusen (right) that were founded in the 19th century have developed into modern industrial areas with plenty of benefits for international investors.

Chemical Concierge - The chemical park concept was developed in Germany in the 1990s. It is used successfully at many German locations and is unique to Germany. Chemical parks are professionally managed sites. Operators offer investors a comprehensive range of services, which allows investors to develop their business models and structure them individually.

Most of the European countries with a population of around 501 million are within a radius of 1,000 kilometers from Germany - From a logistical aspect, Germany is the central axis of Europe. Important trans-European transportation corridors pass through Germany. This means that Germany has excellent connections to the other European economic regions. Almost every place in Europe can be reached within three hours by air, 24 hours by road, or 30 hours by rail. Seaports on the North and Baltic seas connect the country to the world markets.
Consequently, the sales markets in neighboring countries are more or less just outside the front door - and free of trade barriers.
The economic importance of Europe and especially Germany becomes clear when we compare it with the global economy and the U.S.: At more than €12,200 billion, GDP in the EU makes 25% of the global economy and is bigger than that of the U.S. Germany‘s GDP is nearly €2,500 billion and, at 20%, makes up the largest proportion in the EU.
Population figures also illustrate Germany‘s importance: Of the 501 million people in the EU, more than 82 million - or about 16% - live in Germany.
Location, economic power and the large population are among the reasons Germany is the most important sales market in the EU.

Chemical Industry in Germany
The number of foreign chemical companies in Germany has more than doubled since 1991. More than 410 foreign companies in the chemical industry are active in Germany. They generate sales of about €72 billion each year and employ roughly 147,000 people.
What are the main reasons for chemical companies to settle in Germany?
By producing in Germany it is easy to satisfy the large demand for chemical products in the German domestic market. It is also possible to open up the other markets in Europe.
Also in terms of exports the chemical industry in Germany - with almost €134 billion - is No.

1 in Europe. Here, too, the economical and logistical advantages of Germany are obvious.

The Best Workforce in Europe
Good employee training combined with continuous advanced training in the plants is the main success factor of work in Germany.
A further success factor is the stable social partnership. There are long-term partnerships between employees and companies and a high level of loyalty to companies on the part of employees.
Businesses and trade unions are in continuous dialog with each other, while maintaining an agreement-oriented partnership.
The economic stability in Germany can also be seen in the development of labor costs. Between 2006 and 2009 labor costs in Germany increased by about 10%, which is one of the lowest rates of increase in the world. These stable labor costs over many years are also a result of the agreement-oriented partnerships between German companies and the trade unions.
But the stability of the underlying economic conditions in Germany becomes even clearer when we look at the unit labor costs. While unit labor costs rose in many countries between 2005 and 2010, in the German industry the unit labor costs actually fell by about 0.3% - an important contribution toward increasing the competitiveness of companies that produce in Germany.
Universities and universities of applied sciences are in all parts of Germany and close to the chemical sites. Chemistry is offered at 58 universities, 18 universities teach biochemistry and 15 universities offer food chemistry. Chemistry is also taught at 24 universities of applied science. The high density of universities and research facilities in Germany forms an outstanding basis for innovation.
In addition, Germany has 76 non-university research and development facilities that focus on the chemical industry and associated industries.
In Germany, about 40,000 people work in research and development in chemistry. Historically, in Germany there has always been an alliance between research and development and production - a network of universities, R&D facilities, and companies with a breadth and depth that is among the leaders in the world. The intensive transfer within this alliance ensures that there is never a shortage of qualified staff that the training and education meets the needs of companies, and that Germany retains its lead in terms of research, technology and production expertise.
Visible indications of the great innovative strength in the German chemical industry are the research results that are reflected in patents. In 2009, in a worldwide comparison, Germany took second place behind the U.S., with a share of more than 20% of patent registrations.

World Champion of Logistics
The World Bank points to Germany as the most efficient country. The most essential advantages are the above-average infrastructure, the fast customs clearances and the excellent punctuality of shipments.
Germany has a dense network of transport routes to ship products within Germany and to neighboring countries.
The road density in Germany is twice that of the EU average. The transportation routes, such as road, rail and waterways, have a combined length of nearly 60,000 kilometers. A Germany-wide pipeline network links the large chemical locations in Germany with each other and with neighboring countries.
Germany‘s geographical position in the middle of Europe also means that all trans-European transportation routes cross here.

Chemical Parks and Their Unique Benefits
Germany's chemical sites have more than 2,000 hectares of vacant development sites. The chemical parks offer the companies that settle there numerous integration opportunities - from integrated product supply systems and technology networks to personnel platforms.
In this connection, a new industry segment has formed - site operators - that provide the companies that settle there with a well-developed infrastructure and services as well as transfer of expertise from a single source.
The goal of site operators is to provide companies in the chemical park with an attractive economic basis. The range of services is aligned to the economic success of the companies at the site. The site operator provides fully developed building sites with a chemical industry-based infrastructure, which is further developed to suit specific needs. Site operators also offer an extensive range of services. Consequently, companies that settle in the chemical parks can focus on their core business to their own economic advantage.
Service providers can also supply management processes such as capital or personnel procurement and controlling.
At the chemical park, support processes are provided as services, and existing infrastructure is used. Investors can call on qualified service providers - including plant planning, provision of sites and infrastructure, safety services for fire and building protection, disposal services, analytics, energy supply, technical services, site logistics, and public relations. Companies can purchase support functions as needed.
The company also benefits from scale effects and expertise sharing. By using the services and the infrastructure, investors can gain further time and cost benefits and considerably reduce the time required to get products on the market.
Cooperation with other companies in the chemical park and in existing, optimum network structures offers investors attractive synergy potentials.
From an economic aspect it all makes sense - costs of capital are reduced, ongoing costs are also reduced and the yield increases.

Authors

Contact

VCI Verband Chem.- Ind. e.V
Mainzer Landstr. 55
60329 Frankfurt
Germany
Phone: +49 69 2556 0
Telefax: +49 69 2556 1471

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