Reboot Germany: €735 Billion, Three SMEs, and the Question of Whether the Crisis Is Really That Bad

10 min Read Time

Insolvencies are rising, skilled workers are scarce, and the economy is sputtering. Headlines declare Germany is in crisis. What they omit: 105 companies have pledged €735 billion in investments for the German location. CLAAS is investing €320 million in R&D – even as revenue declines. TRUMPF is committing €186 million to its headquarters in Ditzingen – even as markets collapse. And creditor claims in insolvency proceedings fell in 2025, rather than rising. The panic narrative is cracking. We examine who’s behind it.

The Key Takeaways

The Crisis Narrative and Its Blind Spots

Germany’s Federal Statistical Office recorded 24,064 corporate insolvencies in 2025 – 10.3 percent more than the previous year and the highest figure since 2014. Headlines were predictable: Germany was on a downward trajectory, the Mittelstand was collapsing, deindustrialisation was unstoppable.

The numbers are accurate. What’s missing from the debate is the second half of the statistic: creditor claims fell over the same period – from €58.1 billion to €47.9 billion. So while there are more insolvencies, the economic damage per case has decreased. This means the economy’s foundational pillars aren’t crumbling. Instead, a cohort of smaller firms – artificially sustained through pandemic-era aid programmes – is being weeded out. Painful for those affected, yes – but not a structural crisis. It’s a normalisation.

Historical context sharpens the picture further: 24,064 insolvencies is the highest since 2014, when 24,085 cases were registered. But in the crisis year of 2009, the figure stood at 32,687. Germany is far from experiencing an insolvency wave comparable to the financial crisis. What we’re witnessing is a delayed market correction following three years of artificial stability – courtesy of pandemic aid, KfW loans, and energy price caps. Painful for those involved, yet no sign of systemic failure.

March 2026’s economic indicators paint a contradictory picture. The ifo Business Climate Index fell to 86.4 points – the expectations component plunged as sharply as it had in over three years, driven by energy insecurity and geopolitical tensions. At the same time, the Manufacturing PMI climbed to 51.7 – the highest level since June 2022. New orders are growing at their fastest pace in four years.

How do these fit together? Sentiment is nervous – but production is humming. Executives worry about the next twelve months, yet procurement teams are ordering more materials than they have in years. That’s the classic signature of an economic turning point: real-world activity shifts before sentiment catches up. The Bundesbank forecasts significantly stronger growth starting in Q2 2026, fuelled by public investment and a rebound in exports.

These aren’t cause for celebration. But neither do they depict a nation throwing in the towel.

€735 Billion: What Lies Behind the Number

In July 2025, Christian Sewing (Deutsche Bank), Roland Busch (Siemens), Mathias Döpfner (Axel Springer), and Alexander Geiser (FGS Global) launched the “Made for Germany” initiative. At launch, 61 companies pledged €631 billion in investments. By end-2025, membership had grown to 105 companies, with total pledges reaching €735 billion by 2028.

„Germany needs a new operating system – one geared toward growth, technology, and competitiveness. Now is the time. Politics and business must establish a new form of collaboration.”
Roland Busch, CEO Siemens (Ad Hoc News, July 2025)

Criticism of the initiative is valid – and shouldn’t be glossed over. Industry publication Table.Media published a leaked internal communications document revealing that many announced investments had already been planned before the initiative launched. BASF had already approved construction of a training lab; Bosch had decided to retrofit its Bamberg plant; DHL had greenlit a parcel hub in Alsfeld.

The document included talking points for participants: “Investment sums may fluctuate. What matters is the clear signal of investment readiness.” That phrasing shows the organisers themselves understood how thin the line between genuine commitment and PR could be.

Still, dismissing the initiative as pure symbolism would be wrong. €735 billion isn’t nothing – even if part of it would have been invested anyway. The true value of “Made for Germany” lies not in the sum, but in the signal: Companies like BMW, Siemens, SAP, and Microsoft Germany are publicly betting on Germany. In an era where the dominant narrative is “offshoring,” that’s a powerful counterweight.

R&D even during downturns. (Pexels)

CLAAS: €320 Million in R&D, Even as Revenue Falls

CLAAS exemplifies how Mittelstand firms invest without waiting for the economy to turn. The agricultural machinery maker from Harsewinkel reported a modest revenue dip – from €5.0 billion to €4.9 billion – in FY 2025. Its response? €319.9 million in research and development – the third consecutive year above €300 million.

What CLAAS does with that money is telling. Two new fully automated production lines went live: a pre-fabrication centre in Harsewinkel and a high-bay warehouse in Bad Saulgau. Simultaneously, the company launched “CLAAS connect” – a digital ecosystem enabling cross-manufacturer fleet management.

Free cash flow rose 32 percent to €252 million – even as revenue dipped. That’s the hallmark of a family-owned firm thinking long-term: not slashing investment at every economic hiccup, but building precisely when capacity and suppliers are available.

This isn’t an isolated decision – it’s embedded culture. CLAAS machines operate on fields across 140 countries. When the core business thrives, family firms use weaker quarters to deepen manufacturing capability and reduce reliance on external suppliers. The new facilities in Harsewinkel and Bad Saulgau embody exactly that: less outsourcing, more control over value creation. In an era of fragile supply chains, that’s a strategic advantage – not just another capital project.

TRUMPF: €186 Million for Its Headquarters, Right in the Downturn

TRUMPF posted a record €5.4 billion in revenue in FY 2022/23 – the highest in its century-long history. Two years later, revenue stood at €4.3 billion. A 17 percent decline. Order intake in machine tool manufacturing is weak; demand from China has collapsed.

What TRUMPF did during its boom phase speaks louder than its current dip: €316 million flowed into fixed assets. Of that, 59 percent went to Germany – primarily its Ditzingen headquarters. That’s roughly €186 million invested in a location others had already written off.

Ditzingen employs around 5,900 people. During its boom, TRUMPF could easily have expanded into lower-cost locations. Instead, it doubled down on Germany. That was a deliberate location decision – not an automatic one.

The current revenue dip is cyclical – not structural. Germany has re-emerged as TRUMPF’s largest single market this fiscal year, having briefly slipped behind Asia.

What sets TRUMPF apart from many competitors: it invested countercyclically. During the boom, when every manufacturer was expanding capacity and construction costs exploded, TRUMPF used its margins to modernise its home base. That pays off now: while others consolidate sites during the downturn, TRUMPF has already completed its investment cycle – and can focus squarely on innovation.

Schüco: 63 Percent International, Yet Deeply Rooted in Bielefeld

At first glance, Schüco of Bielefeld seems like a counterexample. Only 37 percent of its €2.05 billion revenue comes from Germany. The remaining 63 percent originates overseas.

But this isn’t flight – it’s strategy. Schüco internationalised early and shifted focus from selling products to managing the “lifecycle of building envelopes.” Today, it doesn’t just support facade and window construction – it guides clients through the entire usage phase. Its service division grew 29 percent in 2024 to €36 million.

Its 2030 strategy centres on circular solutions and digital lifecycle management. This isn’t a retreat from Germany. It’s the model of a firm scaling German engineering expertise globally – and using its home base as an innovation hub.

The €41.6 million invested in 2024 funds precisely this digital transformation. Schüco is building digital twins for building envelopes, offering predictive maintenance for facade systems, and developing software that maps the full lifecycle of a building component. This kind of value creation can’t be outsourced to Romania or Vietnam. It demands engineers who bridge materials science, software development, and building physics – and those engineers are in Bielefeld.

AI in the Mittelstand: Less Hype, More Impact

Manufacturing meets AI. (Pexels)

The turnaround stories of CLAAS, TRUMPF, and Schüco share a common thread: digitalisation is no longer a project – it’s baked into corporate strategy. That holds true beyond the giants. In 2026, 41 percent of German companies are already using AI – up from 17 percent in 2024, according to a Bitkom survey of 604 firms conducted early in 2026. Another 48 percent are planning or discussing adoption. Only 11 percent deem AI irrelevant.

Concrete examples come from the Green-AI Hub Mittelstand – a Federal Ministry for the Environment initiative. Twenty pilot projects involving SMEs with 50-500 employees presented results in December 2025. KÜBLER GmbH of Ludwigshafen – a heating system manufacturer with ~200 employees – developed an AI-based plant configurator that cuts material footprint by 15 percent. The software recommends the most resource-efficient configuration to sales teams before production begins. System 180 of Berlin – a modular furniture maker – uses AI-powered component recognition to save 10 tonnes of steel and 65 tonnes of wood annually. Across all 20 pilots, 320 tonnes of material were saved.

These aren’t press-conference projects. These are manufacturing SMEs achieving measurable results on modest budgets. Germany adopts AI slower than the US – but closer to industry. Deutsche Telekom and NVIDIA jointly launched Europe’s first sovereign Industrial AI Cloud in Munich. German automotive suppliers deploy AI-driven quality control. Machinery builders develop predictive maintenance models using their own operational data.

The key lies right here: domain expertise plus AI tools. A heating engineer in the Palatinate who’s collected plant data for decades possesses something no Silicon Valley startup can replicate. When he unlocks that data treasure with modern AI models, he builds a competitive edge defensible for years. The Green-AI Hub programme runs until 2029 and continues enrolling new companies.

The Special Fund as a Turning Point

Alongside private investment, the federal government’s infrastructure and defence special fund is fundamentally reshaping the operating environment. Spread over twelve years, it totals €500 billion – of which €18 billion is explicitly earmarked for digitalisation. S&P Global headlines its Q1 2026 Europe outlook with “Germany’s Fiscal Reawakening.” The Deutsche Bundesbank (German central bank) forecasts “significantly stronger growth starting in Q2 2026, driven primarily by government spending and a recovery in exports.”

„Starting in Q2 2026, economic growth will accelerate markedly, driven primarily by government spending and a recovery in exports.”
Joachim Nagel, President of the Deutsche Bundesbank (Bloomberg, December 2025)

International investors are also repositioning themselves. Amundi – one of the world’s largest asset managers – titles its 2026 Germany analysis “Germany: Crisis Comes Opportunity.” This is no German PR document, but the sober assessment of an asset manager overseeing €2.2 trillion in assets.

The combination of fiscal stimulus, falling energy prices, and a stabilising labour market has opened a window of opportunity – not for blind optimism, but for targeted investment. Companies acting now position themselves for the upswing. Those waiting risk finding themselves capacity-constrained when the recovery takes hold.

What This Means for Midsize IT Budgets

The macro figures are impressive. But what does this mean for the CIO of a midsize company with 500 employees, currently finalising their 2027 IT budget?

First: The funding landscape has changed. Since July 2025, KfW’s ERP Digitalisation Loan offers low-interest financing for AI projects, process digitisation, and new digital products. There is no minimum loan amount; applications go through your house bank, with decisions delivered within weeks. The BMWK’s SME Digital Network provides free advisory services across five modules – from digital strategy to IT security. These are not theoretical programmes gathering dust in ministry brochures. All 20 companies in the Green-AI Hub have used them.

Second: While the special fund doesn’t flow directly into corporate accounts, it changes the rules of the game. €18 billion for digitalisation means faster broadband, modernised administrative interfaces, and better digital infrastructure. Investing in cloud migration or AI integration today means operating in a significantly improved environment two years from now.

Third: The companies featured in this article share one trait: They’re investing not despite the crisis – but because of it. Because capacity is available, service providers are hungry for work, and competitors are hesitant. Delaying your ERP upgrade, cloud project, or AI pilot until “better times” means discovering that, when those times arrive, everyone launches simultaneously – and prices surge.

Reboot Germany: Why We’re Telling These Stories

This article launches our new editorial series “Reboot Germany”, running across all four MBF Media magazines: on MyBusinessFuture, in cloudmagazin, at Digital Chiefs, and on SecurityToday. We spotlight stories buried beneath crisis reporting: companies investing instead of waiting; leaders accepting responsibility instead of assigning blame; industries transforming instead of resigning.

Not as a counter-narrative to criticism. Insolvency figures are real. The skilled labour shortage is real. Regulatory hurdles are real. But so too are €735 billion in investment pledges, family-owned firms that have believed in Germany for generations, and a fiscal restart that international analysts are calling a turning point.

In the coming months, we’ll publish comeback portraits, CEO interviews, and sector-wide turnarounds. Four perspectives, one unifying thread: Germany possesses the substance to pull off a turnaround. Now it needs the stories that show how.

Conclusion: Three Questions for Your Next Executive Board Meeting

The crisis narrative serves a purpose: It creates urgency. But it tells only half the story. CLAAS, TRUMPF, and Schüco demonstrate that Germany’s midsize sector isn’t waiting for the economy to turn. It’s investing, automating, and internationalising now – to reap the rewards in three to five years.

All three companies follow the same pattern: invest countercyclically while others cut back; strengthen equity capital while debt becomes expensive; expand the German location because engineering expertise and manufacturing depth are unmatched elsewhere. This isn’t nostalgia – it’s calculation.

€735 billion in investment pledges aren’t a blank cheque for optimism. But their signal effect is real. Production is expanding, the funding framework is in place, and companies like KÜBLER prove that measurable AI results don’t require billions – just 200 employees and the will to begin.

Anyone speaking about Germany shouldn’t just tally insolvencies – they must also count investments. The substance is there. Reboot Germany tells the stories of those who are making it happen.

Frequently Asked Questions

Header Image Source: Pexels