Located in the south-east of Germany’s Lower Saxony state, Braunschweig is a city of about 248,000 inhabitants and home to the headquarters of Nordzucker, Europe’s second largest sugar producer. Building on sectors such as automotive, aerospace and manufacturing, the Braunschweig region had the highest R&D intensity in the EU in 2016, with R&D expenditure accounting for 10.36% of GDP, according to Eurostat.
Despite the strong research landscape, however, Braunschweig has failed to attract matching foreign investment. Greenfield investment monitor fDi Markets has tracked just nine FDI projects in Braunschweig since 2003 – with no investments recorded since August 2017.
Lower Saxony as a whole has had more success, however, garnering 273 greenfield projects with an estimated investment of $10bn between 2003 and 2018, according to fDi Markets. The state still underperformed many of its German peers during this 16-year period, however, ranking seventh out of 16 in terms of its share of greenfield FDI projects (2.5%), below its 9% regional share of German national GDP.
Many German states have strong automotive sectors and Lower Saxony is no different. Wolfsburg, a city less than 30 kilometres from Braunschweig, is home to the headquarters of Volkswagen (VW), Germany’s largest car maker. Meanwhile, a VW battery factory in Braunschweig puts the city in prime position to participate in VW’s ambitious plans to sell 22 million electric vehicles worldwide by 2022.
Bolstered by local research institutions such as at the Battery LabFactory at the Technical University Braunschweig, VW has committed to invest about €300m into the battery factory, which began production of lithium-ion battery systems in November 2019. It is contracted to supply $40bn-worth of batteries to meet VW’s demand of 150 gigawatt hours per year by 2025, according to S&P Global.
The district of Braunschweig's R&D expenditure in the public sector outstrips the averages for both Germany (148%) and Europe (175%, according to the Regional Innovation Scoreboard 2019), with much of the innovation focused on 'mobility', broadly defined by Ted Serbinski of seed accelerator Techstars as technologies and services that enable people and goods to move around more freely.
“As the centre of Europe’s most research-intensive region, [Braunschweig] attracts innovative companies that, often in collaboration with [our] 30 research institutes, develop ideas and solutions for the future, such as in mobility and pharmaceuticals,” says Braunschweig mayor Ulrich Markurth.
This focus on mobility has had positive knock-on effects. For instance, the most recent greenfield project in Braunschweig tracked by fDi Markets – an office expansion by Luxoft, an IT outsourcing company and subsidiary of Russia-based IBS Group – was opened in response to increased R&D within the automotive industry, as well as growing client interest for technical consulting.
A starting point
State and city support for mobility-focused research at local institutes shows the Lower Saxony region is keen to play to its strengths. The Braunschweig office of the German Aerospace Centre – located at a research airport north of the city that houses more than 40 companies and 3200 employees – recently set up Application Platform for Intelligent Mobility, or AIM, a research infrastructure for future intelligent and mobility services.
“There is a high level of knowhow here in Braunschweig and the surrounding region that covers all aspects of mobility,” says Gerold Leppa, CEO of local business development agency Braunschweig Zukunft.
With a share of SMEs that matches the German average of 99.56%, Braunschweig aims to foster the development of local start-ups to exploit this knowhow. “Co-operation between SMEs, as well as with the Technical University Braunschweig and the Ostfalia University of Applied Sciences, makes Braunschweig the ideal location for start-ups,” adds Mr Leppa.
Braunschweig will be hoping investors agree, and that such co-operation will lead to a developed start-up ecosystem and improved FDI, boosting local businesses and the economy.