Germany Races to Modernize industry with AI

Germany risks becoming an “industrial museum” – a warning that has been raised for years – if it does not adopt a radical modernization of its industry, and that now includes artificial intelligence (AI).

Productivity in Europe’s largest economy has barely grown in 15 years, the export share of cars and machinery is declining, and energy costs in Germany are among the highest in the G7 group of rich nations. Together,this has created a toxic mix that steadily erodes the country’s global competitiveness.

Political and business leaders believe there is a narrow window to reverse this decline by fully embracing AI in factories and supply chains. If these steps are taken, Germany could catch up with the two largest global players: the United States and China.

During the inauguration of Jupiter,Europe’s first exascale supercomputer,in September,German Chancellor Friedrich merz noted that the two global powers are in a “head-to-head race to compete for future market share in a global economy supported by AI.”

“We in Germany and Europe have every chance to catch up and keep pace,” Merz added.

The United States and China have moved forward with AI models like ChatGPT and DeepSeek, as well as advanced chips and industrial-scale stress testing in data centers. Their early testing demonstrates that their systems can handle AI workloads at business-critical scale without downtime.

Endless AI Pilot Projects

Simultaneously occurring, German industrial giants have been accused of being stuck in so-called pilot project purgatory, experimenting with AI but hesitating to implement aspiring projects on a larger scale.

“Many companies still lack clear AI strategies and the ability to manage change,” artificial intelligence expert and author thomas Ramge told DW. “That’s why pilot projects become part of core operations.”

Once German industrial leaders can demonstrate the economic benefits of AI, Ramge added, the country’s deep manufacturing knowledge and its network of small and medium-sized companies, suppliers within large supply chains, will help Germany catch up.

Germany’s Economy Ministry