Germany is the world's third largest industrial power, behind the United States and Japan. The major industrial concentrations of western Germany are the Ruhr-Westphalia complex; the Upper Rhine Valley, Bremen and Hamburg, notable for shipbuilding; the southern region, with such cities as Munich and Augsburg; and the central region, with such industrial cities as Salzgitter, Kassel, Hanover, and Brunswick. In the east, most of the leading industries are located in the Berlin region or in such cities as Dresden, Leipzig, Dessau, Halle, Cottbus, and Chemnitz.
The main industrial sectors in the former GDR were electrical engineering and electronics, chemicals, glass and ceramics. The optical and precision industries were important producers of export items. Following unification, wages in the east were allowed to reach levels far exceeding productivity. As a result, many factories closed and industrial production plunged by twothirds before stabilizing.
German industry has been struggling with high labor costs, stiff international competition, and high business taxes. Large industrial concerns like Daimler-Benz are spinning off unprofitable companies, cutting staff, and looking for ways to boost productivity. Policies such as these have led to a loss of nearly 2 million industrial jobs since 1991. Other companies, like the electronics giant Siemens, are moving plants abroad in search for lower labor costs and to secure positions in developing economies like China and Thailand. In the first half of 1998, German companies invested over $17 billion abroad.
In 2001, Germany produced 5,691,677 automobiles, a 3% increase over 2000. It also produced 178,938 heavy trucks in2000. Despite the costs of restructuring the former GDR, Germany had some of the largest and most successful companies in the world in 2002, from automobiles to advanced electronics, chemicals, utilities, and leisure and sportswear. German industrial products are known for their high quality and reliability. Nevertheless, the global recession that began in 2001 negatively affected German industry, with 45,000 insolvencies in 2002, including Holzmann, the large construction company. The construction industry, which experienced a post-reunification boom in the early 1990s, experienced an 8% drop in orders at the beginning of 2002. Some analysts in 2002–03 predicted the poor global economy would force German industries to restructure and become more competitive.