Germany’s Leipzig Is A Place To Scale For Innovative Companies In Traditional Industries

Leipzig is home to many top-tier players in manufacturing, logistics, and IT. Available skilled workers, attractive prices for commercial space, and many other conditions offer business owners looking to expand enormous savings potential and competitive advantages!

Leipzig: Home To Traditional Industries & New Technologies

Ever since the beginnings of industrialization, the region has been world-famous for mechanical and vehicle engineering – turning spindle machines, aircraft, and even cable cars like the one that takes passengers up to the Table Mountain in Cape Town all came from Leipzig, a city located in Saxony, Germany.

But what is it that makes businesses thrive in this region?

According to Helen Stöhr, Manager of International Markets at Invest Region Leipzig, "The entrepreneurial ecosystem in Leipzig is very much tech-driven and mainly designed by engineers, computer scientists, and creatives with a very curious and inviting mind. People here are committed to innovation – and owing to the city’s size, its network is strongly interconnected. Developing business here is often easier than in bigger cities with an overloaded run of requests".

And – there’s more!

Excellent Logistics Location

Leipzig offers excellent conditions for efficient, innovative, and digital manufacturing for companies even with logistically extensive supply chains. The region is an attractive location due to its central position in Europe and a trimodal traffic connection with the second-largest freight airport in Germany. With its 24-hour operation, the Leipzig/Halle Airport is a significant locational factor and the reason for well-known manufacturers such as BMW, Porsche, Future Electronics, or Dow Chemical settling in its vicinity. It’s one of the top 5 European cargo hubs, making it easy to access the growing markets in eastern Europe and Asia.

A Place To Scale

The sharp increase in employees and companies in the region is no accident as it offers optimal framework conditions for sustainable company growth. The rapid development of Leipzig-based startups and scaleups such as APPSfactory or DeskCenter Solutions shows that companies benefit from location advantages such as comparatively low rents, competitive wages, and outstanding (IT) infrastructure.

The Tech Industry As A Driver Of Growth

With more than 1,200 companies and around 14,000 employees, the tech industry has been the fastest growing industry in Leipzig for years. The city has one of the densest tech ecosystems in Germany – almost 28% (2020) of all inner-city office space is occupied by startups and established companies in the digital economy. With the rapid growth of the e-commerce company Invia Group, formerly known as Unister, the region also moved onto the European e-commerce map at the end of the 2000s. Driven by strong growth, the location has extensive expertise and networks and is considered one of the top developer locations in Germany.

It’s Affordable

Despite strict rent control laws, you can still expect to pay €13.20 per square meter for accommodation in Berlin and Hamburg. In Leipzig, it’s just €7.21 per square meter (2019) – on average you’ll pay €512 for a one-bedroom apartment in the city center – so you can more comfortably afford an inner-city life.

When it comes to trained specialists, more than 45 vocational schools in Saxony train the next generation in technical professions. Currently, there are 36,000 engineering students enrolled in Saxony along with 19,000 highly skilled professionals in the workforce. Moreover, companies based in Leipzig benefit from attractive salary structures. In a nationwide comparison, the remuneration of qualified specialists is well below the average: the average salary per year is 63,531 EUR in Western Germany compared to 45,124 EUR in Eastern Germany, where Leipzig is located. This results in enormous savings potential and competitive advantages.

The interplay of logistics-relevant location factors as well as the quantitative and qualitative depth of existing companies together with relevant locational factors are unique in a nationwide comparison. This combination forms an important cornerstone for the development of the Leipzig region towards a modern, effective economic location with international significance.

Advancing Digital Manufacturing & Industry 4.0

The Leipzig region is a traditional hub bringing out solid but innovative manufacturing tools and techniques. Businesses in the region are experienced in advanced manufacturing technologies, from digital manufacturing to robotic automation and cybersecurity. Particularly technologies such as artificial intelligence (AI), virtual reality (VR), big data, cloud computing, and additive manufacturing are implemented at the location. Clusters additionally enable companies to make use of all it has to offer. "Building 3D", for example, bundles manufacturers, service companies as well as R&D institutes from the region within their value-adding "3D House" network with nationwide impact.

Apart from these clusters, the university association "Saxony5" fosters innovation in the digital manufacturing industry through Co-Creation Labs such as the "Factory of the Future".

Connecting Logistics & Supply Chain

Logistics location Leipzig – that stands above all for tailor-made solutions for the various industrial value chains in supply and packaging logistics. The Saxon logistics industry also proves its strength in the field of information technology, in particular in the fields of supply chain and warehouse management or for digital fleet management. Available skilled workers and attractive prices for commercial space ensure that numerous leading industrial and logistics companies, including well-known and internationally operating companies such as DHL, Amazon, and DB Schenker, favor the region.

Because of Leipzig’s unique offerings, it is home to many testing projects. One of these projects – currently ongoing – is "SMile – Smart Last Mile Logistik", coordinated by the Logistics Living Lab.

Cradle Of Innovative Champions

Whether it is digital manufacturing and industry 4.0 or logistics & warehousing – the Leipzig region is developing into a nationwide hotspot for research in the fields of Big Data & Artificial Intelligence, Cybersecurity, and 5G Connectivity.

The KI Hub Sachsen, for example, focuses on the practical use of AI to make daily work processes more efficient. A total of 17 entrepreneurs and scientists from the Leipzig region have been part of the initiative since 2019, when it was initiated by InfAI. InfAI sees itself as a transfer institute and innovation engine for solutions based on current information and communication technologies.

When it comes to cybersecurity, Europe’s independent specialist in anomaly detection and network security, Rhebo started its business as a team of the first cohort of SpinLab – The HHL Accelerator in Leipzig in 2014. In 2019, the decision was made to locate the Federal Agency for Innovation in Cybersecurity at Halle-Leipzig Airport. Its aim is to protect military and civil computer systems from hacker attacks and to award research contracts in the field of cybersecurity. Another innovative champion is ipoque, a Rohde & Schwarz company, a global leader in the world of deep packet inspection and network analytics software.

What’s more, through the Tri5G project, northern Leipzig becomes a 5G pioneer region within Germany. The core team of the project consists of the BMW Group Plant Leipzig, DHL Hub Leipzig, Airport Leipzig / Halle, Leipzig Group, Leipziger Messe, DB Schenker, City of Leipzig, University of Leipzig, and HTWK Leipzig.

Get Settled With Invest Region Leipzig

Leipzig is a growing city with a broad economic base that welcomes innovation. Its lively corporate and startup scene as well as the vibrant higher education system foster highly-skilled talent while the city also offers optimal infrastructure, an outstanding R&D landscape, available funding, international networks, and high quality of life.

Considering Leipzig when expanding to Germany is a great opportunity for startups & scale-ups and with the right partners such as Invest Region Leipzig, settling-in to this fast-growing region becomes even easier.

Invest Region Leipzig designed a process for you to find out if the Leipzig region is the right place to expand – without any risk or costly investments. The package offers custom support on all topics, including:

Funding
Recruitment
Scaling
Building a business network

"Our strong relationships with associations, industry members, administrators, and investors will connect companies with all the interesting players," concludes Helen Stöhr. If you are looking to set-up your business in Germany, visit Invest Region Leipzig’s website & get in touch!

A guest post by Gerhard Maier (published in the AddMag 3/2020, p. 54ff)

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