Lexi Webster
Austria is a wealthy, German-speaking nation in Central Europe with a diverse and robust economy. The country's industrial sector is thriving, with a manufacturing sector that accounts for nearly 20% of its GDP. Austria's industries include construction, electronics, tourism, food and drinks, logistics and transportation, automotive, and chemical industries, as well as steel and mechanical engineering. The country has a strong labour movement and a well-developed infrastructure for transport and global trade.
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What You'll Learn
Manufacturing
Austria's manufacturing sector covers a diverse range of industries, including metal technology and machinery, automotive, electronics, and arts and crafts. The country has a reputation for quality and innovation, with Austrian components used in vehicles worldwide. This success is driven by several factors, including a skilled labour force, a strong focus on manufacturing, and robust in-house research and innovation capabilities. The government also plays a role, offering a 14% research and development (R&D) tax refund, which enables companies to be more competitive internationally.
One notable example of Austria's manufacturing success is KTM Industries, Europe's leading motorcycle manufacturer, with a 9.5% market share in North America. Another example is PALFINGER, which produces high-quality lifting solutions. Austria is also known for its arts and crafts, particularly fine handcrafted items, customised jewellery, ceramics, and glassware.
The manufacturing sector in Austria is evolving, influenced by market dynamics, economic conditions, and global trends. Companies are seeking opportunities for expansion, diversification, and innovation, with mergers and acquisitions (M&A) playing a strategic role in achieving these goals. The financial sector and the Industrials sector, which includes manufacturing, are expected to remain at the forefront of M&A activity, highlighting the potential for further growth in the manufacturing industry.
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Electronics and electrics
Austria's electronics and electrics industry is a key driver for future-oriented technologies, such as automated driving, the Internet of Things, and Industry 4.0. The industry's strength lies in its ability to design and produce integrated circuits, combining them with specific software to create intelligent electronic devices and systems. This sector includes mechatronics, electrical engineering, car electronics, electronic supply, automotive suppliers, services, control engineering, electronics wholesale, and plant technicians.
The electronics industry in Austria is characterised by its innovativeness, product diversity, research capabilities, and know-how. It has a world-class ecosystem for microelectronics, with large corporations conducting intensive research activities in collaboration with technology parks, universities, and universities of applied sciences. The country's electronics sector employs thousands of locals every year, with approximately 63,000 people working in nearly 200 companies.
Austria has established itself as a leading business location for microelectronics, both in research and production. The country provides incentives for billions of investments in this sector to reduce dependence on individual countries and regions for semiconductors. The Austrian Federal Government allocated €3 billion for chip research and production in October 2023, based on the European Chips Act. This move is expected to attract over €7 billion in investments in the country's chip industry.
The electronics industry in Austria is closely linked to the country's automotive sector, with microelectronics integrated into almost every modern automobile. Additionally, the country's electrical and electronics industry has a significant global market share in security chips for passports, optical light sensors, and chips for energy efficiency. The collaboration between research centres and companies like NXP Austria and Infineon Austria contributes to the sector's success.
Austria's high quality of living, central location in Europe, and outstanding research landscape make it an attractive destination for tech startups and established companies in the electronics and electrics industry. The country's low unemployment rate and relatively low cost of living further contribute to its appeal for talent in this sector.
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Food and drinks
Austria's food and drinks industry is a vibrant and diverse sector, offering a range of unique culinary experiences to locals and tourists alike. From traditional fare to modern, sustainable cuisine, the country has something to delight every palate.
At the heart of Austrian cuisine lies a love for hearty and indulgent dishes, generously using meats and root vegetables. Traditional meals are often carb-laden, providing fuel for those exploring the country's stunning mountains and imperial cities. Signature dishes include the world-famous Wiener Schnitzel, a breaded veal cutlet fried to a golden-brown colour and served with potato salad. Tafelspitz, the national dish, is a tender cut of boiled beef served with roasted potatoes, apples, horseradish, and chive sauce. It is said to reflect "the soul of the empire" and was a favourite of Emperor Franz Joseph. Gulasch, a paprika-spiced meat stew with origins in Hungary, is another beloved classic. For dessert, Apfelstrudel, a flaky pastry with apples and raisins, or Kaiserschmarrn, a shredded fluffy pancake with fruit compote, are popular choices.
The country also boasts a thriving cafe culture, with conversations often rolling on for hours over cups of specialty coffee or thick hot chocolate. Vienna, in particular, is renowned for its coffeehouses, with the first, Kaffeehaus, established in 1683. Jause, a 4 pm coffee-and-pastry ritual, is a daily practice in the city's coffeehouses. Austrians also enjoy their alcoholic beverages, with Schnaps being a preferred aperitif, and wine and beer widely consumed. The country produces fine wines, with the Wachau district west of Vienna known for its delicate, fragrant wines, and Vöslau producing the country's best-known red. The city of Graz, dubbed Austria's "Culinary Capital," leads the way in sustainable and local food movements, with farm-to-table dining being more than just a trend—it's a way of life.
In recent times, Austrian cuisine has evolved, with modern chefs embracing the farm-to-table movement and creating ever-changing menus crafted with locally sourced, seasonal ingredients. The country is home to 16 Michelin-starred restaurants, 15 of which are in Vienna and Salzburg. These restaurants showcase the best of Austrian fine dining, with innovative dishes prepared using homegrown or artisanal produce.
Whether it's traditional fare in a cosy tavern or contemporary cuisine in a gourmet restaurant, Austria's food and drinks industry offers a delightful mix of flavours, traditions, and innovations, making it a culinary destination that leaves visitors wanting more.
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Construction and building
Austria has been at the forefront of sustainable construction, integrating renewable energy sources and future-oriented technology into their designs. The country's success in the "Solar Decathlon" competition in 2013 showcased its expertise in this field, gaining international recognition. Austrian companies are committed to minimizing the environmental impact of construction, contributing to climate protection through their innovative approaches.
The construction industry in Austria is currently undergoing a complex phase, with a mix of challenges and opportunities. While there has been a decrease in demand for new construction projects, there is a growing emphasis on sustainability and compliance with environmental regulations. This shift presents opportunities for construction companies to adapt to emerging trends and strategic initiatives, such as the integration of renewable energy and smart infrastructure development.
Digital technologies are also reshaping the industry, with Building Information Modeling (BIM) becoming an increasingly adopted standard practice. Clients and construction companies need to stay abreast of legal implications and ensure seamless cooperation among various stakeholders. Additionally, the Austrian government has implemented initiatives to support the industry, such as temporarily waiving land registration and mortgage fees to stimulate residential construction.
Austria's construction landscape is influenced by major construction companies, developers, and government initiatives. The country's heavy industry, including iron and steel production, is concentrated around cities like Vienna, Linz, and Leoben, providing a foundation for construction and other industries. The Alpine Region and Vienna are notable for their sustainable construction practices, with Vienna implementing fully digitalized applications for building permits, enhancing communication and efficiency.
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Energy and natural resources
Austria is committed to reaching climate neutrality by 2040. The country has implemented various policies and initiatives to ensure responsible resource extraction, conservation, and renewable energy production. Over three-quarters of electricity generation in Austria comes from renewable sources, with a target of achieving 100% renewable electricity supply by 2030. To achieve this goal, Austria will need to invest in making its networks more resilient and flexible, optimising demand-side management, and updating its legal and regulatory framework to allow for more consumer participation.
Austria has a diverse range of natural resources, including forests, minerals, water, agriculture, geothermal energy, wildlife, and oil and gas. The country's forests cover over 47% of its land area and are a vital source of timber and other forest products. Austria is also a leading producer of natural magnesite, a magnesium carbonate used extensively in the chemical industry. Other important mineral resources include iron, copper, lignite, anhydrous gypsum, lead, zinc, and antimony.
Austria is rich in geothermal energy resources due to its location in the Alpine region. Geothermal energy is harnessed by tapping into the natural heat stored beneath the Earth's surface and provides heating and electricity for residential, commercial, and industrial purposes. In addition, Austria has abundant water resources and is a leader in hydroelectric power generation. The country's dense network of rivers and mountainous terrain make it a major exporter of hydroelectric power.
While Austria is not a major producer of oil and gas, it does have significant reserves of these resources. The country's oil and gas industry meets domestic energy needs and reduces dependence on imports. Austria has implemented measures to promote the environmentally responsible exploration and extraction of its oil and gas reserves, including strict regulations on drilling operations to minimise environmental impact. However, in 2022, imported oil and gas still accounted for 35.4% and 16.8% of energy consumed in Austria, respectively.
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Frequently asked questions
Austria's major industries include construction and building, electronics and electrics, tourism, food and drinks, logistics and transportation, automotive and chemical industries, as well as steel and mechanical engineering.
The industrial sector contributes about 22% to Austria's GDP. The service sector, on the other hand, contributes around 70% of the GDP.
Some examples of successful small and medium-sized enterprises in Austria are Rosenbauer (fire trucks), Doppelmayr (ski lifts), Frequentis (control tower technology), and Scheibel (mine detection).
Key sectors for foreign investment in Austria include manufacturing, tourism, electronics, and food and drinks. Austria's stable economy, high living standards, and well-developed markets make it an attractive destination for foreign investment.
