GERMANY –    Woodworking machinery and equipment makers continue to anchor their research and development in Germany, according to the latest VDMA  (German Association of Machinery and Equipment) survey.

The study shows that 84% of all R&D activities in the sector take place domestically, with small and medium-sized companies often keeping 100% of projects in Germany. Even large firms with global operations maintain around three-quarters of their R&D budgets at home.

The decision reflects the advantages of Germany’s industrial ecosystem—dense supplier networks, skilled engineers, testing facilities, and close links between R&D and production. Companies also see domestic research as protection against trade tensions and geopolitical risks.

Despite global headwinds, 41% of companies plan to keep R&D spending stable and 37% expect increases in 2025. Use of Germany’s R&D tax credit, the “research allowance,” is rising fast, with 48% of firms now benefiting, particularly SMEs.

However, the survey also highlights growing concerns over dependence on non-European technology, especially in AI (86%), big data (64%), and microelectronics (49%). Meanwhile, 65% of firms see China as their top innovation competitor, far ahead of the U.S.

VDMA warns that safeguarding know-how, boosting local technology investment, and aligning public research with industrial needs are crucial to maintaining Germany’s competitive edge in wood machinery.