East or West? German Industry at a Crossroad

By Elke Porter | Canadian German Business News | April 22, 2025

As global trade faces increasing fragmentation, ARBURG, a leading German innovator in plastics processing, is strategically adapting to a shifting economic landscape. The family-owned company, founded in 1923 and headquartered in Loßburg, Germany, is renowned for its ALLROUNDER injection moulding machines, introduced in 1961, and its advancements in additive manufacturing since launching the Freeformer 3D printing system in 2013. With over 3,600 employees and operations in more than 100 countries, ARBURG is now recalibrating its global strategy to address rising trade tensions and supply chain challenges.

A World in FluxFor decades, globalization fuelled Germany’s industrial success, with China emerging as a critical market and production hub. In 2023, China accounted for approximately 16% of German machinery exports outside the EU and roughly 10-12% of direct manufacturing investments, according to the German Machinery and Equipment Manufacturers Association (VDMA) and Bundesbank data. However, escalating U.S.-China tensions—marked by tariffs, technology restrictions, and U.S. policies like the CHIPS Act (2022) and Inflation Reduction Act (2022)—are reshaping global trade.

These measures incentivize American manufacturing while limiting technology transfers, pressing German firms like ARBURG to reassess their supply chains and market priorities.German manufacturers face two key imperatives:

Navigating Geopolitical Shifts: The rivalry between the U.S. and China creates pressure to diversify operations and reduce reliance on any single market, balancing access to both regions.
Local-for-Local Production: Producing goods closer to customers enhances supply chain resilience, reduces carbon-intensive transport, and aligns with sustainability goals. ARBURG’s established U.S. operations reflect this approach.

ARBURG’s strategy emphasizes flexibility, leveraging its global network to serve diverse markets while strengthening local capabilities. “Our focus is on sustainable innovation and proximity to our customers,” the company stated in its 2024 sustainability report.

Local-for-Local: A Strategic Pivot

ARBURG has embraced a “local-for-local” model, with facilities like its Rocky Hill, Connecticut, subsidiary and Irvine, California, technical center enabling U.S.-based production and service. This approach minimizes logistics emissions and meets regional demand efficiently, as outlined in ARBURG’s 2023 annual report. By maintaining localized operations, ARBURG aligns with a broader trend among German machinery makers adapting to volatile trade routes and rising costs.

However, risks persist. China remains a key supplier of raw materials and components, and any significant disruption—such as further decoupling—could strain German manufacturers. The Centre for European Reform notes that German firms are vulnerable to supply chain shocks, particularly in high-tech sectors. ARBURG mitigates this by diversifying its sourcing and investing in digital supply chain solutions, but challenges remain in a fragmented global market.

A 2024 Oliver Wyman survey underscores the stakes: 91% of European industrial executives expect geoeconomic fragmentation to define the next decade, yet only 46% feel prepared to adapt. ARBURG’s global footprint and innovation focus position it well, but the broader German industry faces hurdles, including high energy costs and labor shortages, as highlighted by the IMF in 2024.

German Investment in the U.S.

German companies remain optimistic about the U.S. market, driven by its size, customer demand, and logistical advantages. The 2024 German American Business Outlook (GABO), conducted by the German American Chambers of Commerce (AHK USA), surveyed 224 German subsidiaries in the U.S. It found that 91% anticipate sales growth in 2025, with over 40% expecting strong expansion.

Additionally, 96% plan to increase U.S. investments by 2026, with more than 40% committing over $5 million. About 19% of firms without U.S. manufacturing sites plan to build facilities within three years, and 82% aim to expand their U.S. workforce by 2028.ARBURG’s U.S. operations align with this trend, though no specific 2025 expansion plans have been publicly announced. The company’s focus on localized production supports both economic and environmental goals, reinforcing its role as a leader in sustainable manufacturing.

A New Global Reality

The IMF’s 2024 World Economic Outlook notes that globalization’s rapid growth has led to uneven outcomes, with manufacturing job losses in advanced economies fueling calls for trade reform. Germany, despite its trade surplus, has seen a secular decline in manufacturing employment, a trend mirrored in deficit-running countries like the U.S. This underscores the need for adaptive strategies in a competitive global economy.

ARBURG’s response—diversifying supply chains, strengthening local production, and advancing digital solutions—reflects a forward-thinking approach. “Decades ago, we redefined injection moulding with the ALLROUNDER,” ARBURG’s leadership noted in a 2024 statement. “Today, we’re redefining our global strategy to thrive in a new era."

Other German Companies in the USA

The GABO highlights a broader wave of German investment in the U.S., with firms like Siemens and BASF expanding operations. The U.S. market’s stability and proximity to customers make it a priority, even as Germany grapples with domestic challenges like energy costs and a projected 0.3% growth rate for 2025, per Euronews.

Remapping for Resilience

In today’s dynamic economy, agility is paramount. German companies, including ARBURG, are doubling down on U.S. investments to leverage market opportunities and enhance supply chain resilience. Other nations must similarly prioritize flexibility, building local capabilities and diversifying trade partnerships to navigate U.S.-China rivalry and evolving policies. The ability to anticipate and adapt to geopolitical and economic shifts will define industrial success in the decade ahead.

About ARBURG

Headquartered in Loßburg, Germany, ARBURG is a global leader in injection moulding and additive manufacturing. With approximately 3,600 employees, it delivers machines and digital solutions to customers in over 100 countries.

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