German industry is under pressure. From energy transitions to defense mobilization, manufacturers face growing tensions between underutilized assets and production bottlenecks. A new approach—industrial adjacency—offers a practical solution by promoting resource-sharing and flexible cooperation across sectors. This strategy could mark a turning point for the future of Germany’s industrial base.
German Industry at a Crossroads: Bottlenecks vs Underutilization
“Industrial adjacency” — the term may not yet exist in economic language, but it could soon become a major trend in the European and German industrial landscape. It refers to a new form of cooperation between two leading industrial players, with no apparent direct connection, in which one—facing underutilization—opens its production facilities to another experiencing production bottlenecks due to overwhelming demand.
The idea stems from a pragmatic observation: industrial revolutions are occurring with increasing speed and intensity, while transforming a production system remains a lengthy process. A production line, disrupted by rapid technological shifts or market changes, may suddenly become underused, while another is overwhelmed by a spike in demand.
This phenomenon exists in a context where „deindustrialization“ doesn’t mean uniform erosion of the production fabric, but rather a growing asymmetry. On one side, we observe major players facing structural undercapacity or even plant closures. On the other, sectors such as defense, agri-food, or nuclear energy are experiencing soaring needs.
Industrial adjacency aims to bridge these gaps by enabling the former to lend or repurpose their production resources for the benefit of the latter. A „win-win“ strategy for both parties: for those in difficulty, it offers the possibility of amortizing infrastructure and maintaining employment and skills. For those overwhelmed with orders, it provides rapid access to production facilities, outsourced skills, and proven expertise, while keeping operations locally. As a side effect, it reduces the need to build new industrial sites or dismantle abandoned ones, aligning with circular and sustainable industry principles.
A German Case Study: Rheinmetall’s Strategic Shift
Examples of industrial adjacency are likely to multiply. One emblematic case is the German group Rheinmetall, which plans to shift two of its automotive plants in Berlin and Neuss toward defense manufacturing—without fully abandoning their original activity.
Successfully implementing industrial adjacency requires a few key conditions. First, both companies must share common values and a long-term vision. It also implies a major cultural shift for the host company: moving from manufacturing its own products to acting as a supplier for others. This shift demands the ability to quickly adapt to different standards, regulations, and certification requirements. Finally, questions of intellectual property and confidentiality must be addressed.
The Future of German Industry: Toward Circular and Adaptive Models
While this transition is not without challenges, many German industrial players could find strong strategic value in such an approach. Germany’s industrial base is facing dual pressure: maintaining competitiveness in an environment marked by energy transitions and global competition, while responding to unprecedented demand in sectors such as defense, energy infrastructure, and mobility. Industrial adjacency offers a concrete and pragmatic path forward. It deserves serious consideration as a lever for strategic autonomy, regional reindustrialization, and the development of a more resilient and sustainable industrial ecosystem.