Once a leading engine of the Second Industrial Revolution, Germany has in recent years lost ground in digital deployment and in the industrial application of new technologies such as artificial intelligence (AI). Also, mounting geopolitical tensions have further darkened the outlook for its industrial recovery.

HANNOVER, Germany, April 25 (Xinhua) -- At this year's Hannover Messe that concluded on Friday, the sense of contraction was hard to ignore. Only 11 exhibition halls were open, making one of the world's best-known industrial trade fairs notably smaller and quieter than the past.

The contrast is especially striking because it was here, in 2011, that Germany unveiled the idea of Industry 4.0 and presented Hannover Messe as the stage for a new industrial era. Back then, 24 halls were filled with displays of what was billed as the future of manufacturing.

At Hannover Messe 2026, given Germany's situation after three years of economic downturn, many of the exhibitors that are reached are currently cutting costs, said Jochen Koeckler, chairman of the managing board of Deutsche Messe AG, the event's organizer.

While thanking many leading companies for still showing up, Koeckler acknowledged that the fair had contracted, saying that some firms had scaled back their presence, while others could no longer afford to exhibit at all.

Germany's industrial predicament goes well beyond the reduced scale of a single trade fair.

Once a leading engine of the Second Industrial Revolution, Germany has in recent years lost ground in digital deployment and in the industrial application of new technologies such as artificial intelligence (AI). Also, mounting geopolitical tensions have further darkened the outlook for its industrial recovery.

According to the Industry 4.0 Barometer 2026, industrial digitalization worldwide has continued to deepen, with the overall index rising from 48 percent in 2022 to 68 percent today. By contrast, the DACH region -- Germany, Austria, and Switzerland -- has remained stuck at 57 percent. In AI application, it ranked last among the six countries and regions covered by the survey at 37 percent.

Ahead of this year's fair, Germany's digital association Bitkom released a survey of 555 manufacturing companies with more than 100 employees. The survey found that 89 percent of respondents regard Industry 4.0 as crucial to the competitiveness of German industry. Yet 46 percent see themselves as laggards, or even as having already missed the boat, in AI adoption.

A further 58 percent said the current economic slowdown was holding back digitalization in their own companies. Bitkom Vice President Tanja Rueckert urged Germany to open "a new chapter" in Industry 4.0 by accelerating the deployment of digital technologies, AI and, eventually, humanoid robots.

"Instead of the solid recovery we had expected before the Iran war, we now expect stagnation in 2026 compared with the previous year," Peter Leibinger, president of the Federation of German Industries (BDI), said during this year's Hannover Messe.

He said the worsening situation in the Middle East had heightened economic uncertainty and, through higher energy prices, broader price effects, new risks to supply chains and logistics, as well as air-traffic diversions and rising transport costs, had placed an even heavier burden on companies.

BDI warned that if disruptions to shipping persist for an extended period, output in Germany's manufacturing sector could decline for a fifth consecutive year.

In Leibinger's view, geopolitical tensions are not the root cause of the problem. "The costs of doing business in Germany -- an aggregate of unit labor costs, non-wage labor costs, taxes, bureaucratic burdens and energy costs -- are simply too high. We are no longer competitive as a business location."

Amid deepening anxiety across German industry, Chancellor Friedrich Merz stressed the importance of confidence at the opening of this year's Hannover Messe. He said the fair should be seen as "days of the future" and "days of confidence in the future", calling on Germany to look ahead and demonstrate once again what the country is capable of, what ideas it has, and what goals it firmly believes it can achieve.

Competitiveness emerges where innovation is quickly translated into application, said Koeckler.

Koeckler regarded industrial AI as a key driver of competitiveness. "It delivers efficiency gains, boosts productivity, enables more targeted use of resources, and opens up new data-driven business models."

Germany's Economy Minister Katherina Reiche said, "AI will determine the future of German industry and represents 'a chance of survival' for Germany as an industrial base."