"Free State maintains its remarkable status as one of the top ten industrial powerhouses globally"

Bavaria, Germany's powerhouse of industry, has been ranked as one of the top ten global industrial locations in the recent study "Industrial Location Quality in International Comparison." However, the report also highlights some challenges that Bavaria faces in maintaining its competitive edge.

The study combines level and dynamics ranking for the first time, providing a comprehensive overview of Bavaria's standing in the global market. In the level ranking, Bavaria secures a respectable ninth position, four places ahead of Germany, thanks to its broad industrial base and export orientation. The region ranks third in the knowledge category, thanks to its strong innovation environment, high spending on research and development, and numerous patent applications.

However, Bavaria's performance in the dynamics ranking is less impressive. The region struggles to keep up with the rapid development of emerging economies such as India, Vietnam, China, Indonesia, Brazil, Thailand, Ecuador, Israel, Argentina, and Turkey. These countries are closing the gap in location quality and cost competitiveness compared to Bavaria and Germany, with China presenting significant competitive pressure in sectors like automotive, despite recent export declines from Bavaria to China.

The main reasons for Bavaria's struggle in the dynamics ranking are high levels of taxes, labor, and energy costs. These factors make Bavaria less attractive compared to countries like Canada, the USA, South Korea, Japan, and the Netherlands, all of which have above-average location quality. In terms of cost level, Bavaria is at the second-to-last place.

The strength of Bavaria's industry is based on the strength of its location. However, the lead of Bavaria's location is melting away, and its attractiveness is decreasing in international comparison. China is identified as the greatest challenge for Bavaria's economy in the global location ranking. The most critical point is costs. The cost disadvantage of Bavaria is increasing, making it harder for businesses to compete on a global scale.

The black-red federal government has set the course for economic transition and taken the first important steps. High costs are by far Bavaria's greatest location disadvantage, and its position is at risk. In order to remain successful, Bavaria must address its deep-seated structural problems. High spending on energy, labor, and contributions are the greatest growth brake for Bavaria's businesses.

On a positive note, Bavaria achieves a respectable ranking in the market and knowledge categories due to the development of value creation and spending on research and development. In the state, resources, and infrastructure categories, Bavaria is in the midfield.

The most dynamic location development is seen in India and Vietnam, which are emerging as future competitors for Bavaria. The main takeaway is that Bavaria must adapt to the changing global landscape and address its cost disadvantage to maintain its competitive edge.