Amid pipettes and pipelines
German chemicals companies are among the leading global players, and they are facing great challenges.
A gigantic structure of steel, pipes and chimneys towers over the banks of the Rhine: the BASF plant in Ludwigshafen. It is the world's biggest chemical site and covers an area of over ten square kilometres. Established in 1865, the plant now features 2,850 kilometres of piping – a pulsating network that interconnects raw materials, intermediates and finished products. Around 33,000 people are working around the clock on more than 200 systems, producing the building blocks of modern life, from plastics for cars and smartphones through to pesticides.
Alongside the industry giant BASF, the German chemicals industry is made up of over 2,000 other companies. Most of these are medium-sized enterprises, including some hidden champions that are global leaders in their respective niche. With a global turnover of over 220 billion euros and close to 480,000 direct employees in Germany alone, the chemicals industry is the country's third biggest industrial branch, after mechanical engineering and the automotive industry.
Global networking
The German chemicals industry is a major player on the international stage, too, holding the top position in Europe and ranked third globally, after China and the USA. Around 60 percent of the chemical products are exported, other European Union countries, the USA and Asia being the most important markets. By training nearly 8,800 apprentices, 89 percent of whom are taken on once they have completed their training, the chemical-pharmaceutical industry is continually investing in skilled professionals.
This global network is also reflected in the many foreign plants operated by German companies. As one of the world's biggest chemicals groups, BASF operates production, distribution and research facilities in over 80 countries. Other large German enterprises such as Bayer, Evonik, Wacker, Lanxess, Henkel and Altana also have a broad international profile, and they cooperate closely with local enterprises and institutions around the world.
The chemicals industry is a key industrial sector. It supplies vital basic substances and high-tech materials for almost all value chains - from mobility, food and health to defence. However, the sector is suffering from high energy prices, the weak economy and overcapacities on the global market. The Iran war has exacerbated the situation.
The German government wants to work with employers and trade unions to strengthen Germany’s chemicals industry. Unveiled in March 2026, the “Chemicals Agenda 2045” envisages a lower, state-subsidised industrial electricity price and an expansion of electricity price compensation mechanisms. This will indirectly ease the burden on firms resulting from the costs of carbon emissions trading. The German government is also pushing for simplified chemicals legislation in the EU. In addition, the Chemicals Agenda 2045 includes measures to boost research, innovation and investment.
Innovation as a driver of growth
The innovative strength of Germany's chemicals industry is a decisive competitive factor. This is why the industry invests billions in research and development: around 5.5 billion euros in 2025 alone (excluding the pharmaceuticals industry). As a result, 9.4 percent of chemical patents filed around the world are from Germany.
Sustainability is a key issue in this context. Many patents are of elementary importance to meeting the United Nations' Sustainable Development Goals, as well as to transforming the entire economy to achieve climate-neutrality. "If we compare all patents that are relevant to meeting the sustainability goals, the chemicals industry holds the first place due to its role as a technology supplier," says Christian Rammer from the Leibniz Centre for European Economic Research in Mannheim.
Focusing on sustainability and digitisation
Solutions range from crackers, which are large industrial plants for breaking down carbon chains (e.g. from crude oil) into small molecules, using green electricity rather than natural gas, via the use of algae or beetles from infested wood as natural resources for bio-based plastics, through to chemical recycling, where previously non-recyclable plastic waste is fed back into the circular economy rather than incinerated. Innovations such as these are aimed not only at reducing plastic waste, but they can also open up new commercial opportunities, for example in the area of sustainable packaging.
Another focus area is to increase efficiency by means of digitisation. In production, for example, virtual copies of production plants, known as digital twins, can be used for real-time process monitoring and optimisation. Artificial intelligence helps with proactive maintenance work on the facilities, for example. This allows for a more efficient use of resources, as well as reducing downtime.
Challenges: energy prices, regulation and lack of skilled workers
Germany's chemicals industry is faced with considerable challenges, despite its strong position. High energy prices in particular are a stress factor with regard to high-energy production processes. "It is essential that the chemical industry is transformed to be more energy-efficient," said chemicals industry expert Anna Wolf from the ifo Institute in an interview. The industry has been able to reduce its energy consumption by 22 percent and its greenhouse gas emissions by 54 percent since 1990. However, continuous adjustments, investments and, in some cases, job cuts are necessary to handle high costs, bureaucracy, strict environmental guidelines and regulations, such as the EU chemicals regulation "REACH". The situation is further exacerbated by the lack of skilled workers, in particular in the areas of natural sciences and engineering.
Seizing opportunities
The mood oscillates between pessimism and optimism. The transformation of the chemicals industry towards more efficient processes, digital technologies and sustainable product solutions is a challenging endeavour. However, industry experts believe that it also offers enormous opportunities. It is more important than ever before to invest in future-oriented projects and make the right decisions, as was highlighted in a study conducted by Boston Consulting. If the German chemicals industry succeeds in doing this, it will be well-equipped to defend its role as a global leader.
Our everyday life is shaped by the chemicals industry in many ways. It enables us to wear clean clothes, to live in solid buildings and to use a wide range of innovative technology. Basic substances such as acids, solvents, hydrogen, nitrogen and ammonia are the starting point of many chemical products. These are used to produce plastics, for example. High-performance plastics are used in the automotive industry to make vehicles that are lighter in weight and more efficient. In the electronics industry, speciality chemicals are used to ensure a high performance of micro chips and displays. In the construction sector, modern insulation materials and coatings are used to make buildings more energy efficient. Super glues are used to join materials that cannot readily be welded or bolted together. Surfactants, enzymes and fragrances remove stains, neutralise odours and disinfect surfaces. Last but not least, there are fertilisers, plant protection agents and insect repellents that form the foundation of modern agriculture. The list goes on and on, and German chemicals companies are involved throughout.
