Cologne’s manufacturing base comprises a broad mix of chemical, automotive and engineering companies as well as a handful of other industries that have chosen to locate in the city because of its central location within Europe, its proximity to the Rhine and its strong transportation links.

The city is also well served by air with three airports being located within an hour of its centre. The closest, Cologne Bonn, carried 740,000 tonnes of cargo in 2013, putting it third in Germany behind the air transport hubs of Frankfurt and Leipzig. This level of freight handling is typical for a major airport, so although this figure is 2% down on 2013, officials at the airport are still looking towards a bright future. Indeed, when passenger and cargo volumes are combined, Cologne Bonn ranks fifth among German airports. “We’re one of only six airports in Germany that makes a profit,” says Ulrich Stiller, director, marketing and sales, at Cologne Bonn Airport.

Advertisement

The airport operates 24 hours a day, which has enabled it to develop a solid freight business. Mr Stiller says: “This has helped us to be efficient as we can achieve more economies of scale by using airport machinery and facilities around the clock for both passenger and freight movements.”

Airport investment

Cologne Bonn has seen significant investment in recent years. This includes the expansion by US shipment and logistics company UPS of its European air hub facilities and FedEx’s joint €140m investment with the airport to establish a new hub aimed at central and eastern Europe.

UPS’s enlarged facilities, which opened earlier this year, created an additional 200 jobs, bringing the company’s total workforce at the airport to 2500.

"With this upgrade, we now have the equivalent of 15 football fields of sorting space for a growing export economy on the move," said Cindy Miller, president of UPS Europe, during the inauguration earlier this year. "All of this ensures that UPS's Cologne Bonn air hub remains the centrepiece of the company's European express network, a key component of UPS’s global air operations, and one of the largest and most advanced sorting facilities in the world."

FedEx started operating its new hub – which can process up to 18,000 packages and documents per hour – in 2010 after relocating from Frankfurt. It is the company’s second solar-powered 'Express' hub and the fifth of its type within the FedEx group.

On the ground, a major multi-lane ring-road with access to 10 motorways encircles Cologne. Rail travellers are also well served, with more than 800 trains departing from Cologne Central Station every day. The city is also a European rail junction, connecting with high-speed services to Amsterdam (a journey time of 2 hours and 37 minutes), Brussels (1 hour and 45 minutes), Paris (3 hours and 15 minutes) and London (less than 4 hours by 2015).

On the water, Cologne is home to Germany’s second largest inland port area, which consists of four port terminals. Its container terminals are capable of handling three ships at once. Meanwhile, the Eifeltor, Germany’s biggest combined freight terminal, lies just south of Cologne. Rail and inland shipping logistics specialist Häfen und Güterverkehr Köln started operating a new freight terminal in the north of Cologne at the beginning of 2014.

Why Cologne?

Many major manufacturing names as well as innovative small and mid-sized enterprises have set up shop in Cologne. They include chemical, pharmaceutical and biotech behemoths such as Bayer, ExxonMobil Chemical, Lanxess and Ineos. “These industries are well supported by their close proximity to science and research establishments as well as the BioCologne, BioRiver and ChemCologne industry networks, which are helping to promote location development and company creation,” says Michael Josipovic, deputy director and head of international development department of Cologne’s economic development office.

The automotive sector is also well represented in Cologne. The city’s largest private employer is the Ford plant, which has a workforce of about 17,300 comprising staff from more than 50 countries. Engine manufacturer Deutz has a production facility in the city, which is joined by Toyota Motorsport's high-performance testing and development facility. Cologne is also the home of the German or European head offices of a number of vehicle manufacturers, including DAF, Mazda, Nissan, Renault, Volvo and PSA Peugeot Citroën.

According to Ford, when Ford Europe first established its operations in Germany back in the 1920s, it picked Cologne as the location for its regional headquarters because of its access to the rest of Europe and its proximity to a waterway. The company says these features remain important today. In 2013, about 350,000 Ford Fiestas rolled off the assembly line in the north of Cologne, and in June 2014, the company announced that its Cologne operations in the city will be the single source of European production of the next generation of the model.

Cologne is also home to Ford’s European parts distribution centre as well as the John-Andrews Development Center, a centre of excellence for passenger cars, product planning and design, safety, human-machine interface, and craftsmanship.

Headquarter hub

In 2012, PSA Peugeot Citroën set up the joint German headquarters of the two car brands in Cologne. Previously, Peugeot had been based in Saarbrücken and Citroën in Cologne.

“There were many reasons why PSA Peugeot Citroën selected Cologne, but its position as the fourth biggest city in Germany and home to a lot of automotive companies – which helps when recruiting new teams of experts in the sector – were factors,” says Marcel de Rycker, chief executive officer at Peugeot Deutschland. “It also has great infrastructure putting us within minutes of trains, airports and motorways. We can connect to our worldwide headquarters using the Thalys high-speed train to Paris, taking us door to door in just over three hours.”

The firm says local authorities supported its move into a new building in Cologne. “We were put in touch with the relevant property investors and renters who built the new base in Cologne Gremberghoven in just one year,” says Mr de Rycker. “Additionally, they provided support during the construction and licensing phase. The city authorities also helped with finding lodgings and housing for employees that relocated from Saarbrücken. And Cologne’s office for economic development visited Saarbrücken to give Peugeot employees information about the city before the relocation started.”

As manufacturers look to cut costs and possibly head off to lower cost destinations in Asia, what is keeping investors in Cologne? According to Ford, its approach is to build its vehicles in or near its actual markets, especially when it comes to high-volume models such as the Fiesta and Focus. It says Germany is an ideal location to meet the demand of its other European markets, and also offers many advantages such as good logistics. These help to support both of its production sites, which are, it says, among the most efficient vehicle manufacturing plants in the world.