This essay develops the argument of my keynote “Die neue Unübersichtlichkeit” at the CARS 2.0 Transformations-Gipfel on 8 October 2026.
Stuttgart’s industrial future depends on whether the region can put its accumulated capabilities to work under conditions that no longer resemble those in which they developed. Automotive and mechanical engineering remain substantial assets. But the markets, technologies and political relationships that made them successful are changing together. The task is to preserve the capacity to develop and produce complex systems while changing the applications, organisational arrangements and dependencies through which that capacity becomes economically useful.
The German expression die neue Unübersichtlichkeit describes this difficulty more precisely than the familiar language of crisis management. The problem is not simply that the world has become complicated. It concerns the reliability of the categories with which we understand it. A company can analyse its market competently and still misunderstand its situation if the boundaries of that market, the relevant technologies or the political conditions of exchange are themselves changing.
I take Stuttgart as a case through which to examine this problem. My argument moves from the political conditions of industrial success to the forces now unsettling them, then to the capabilities and institutions through which a region can respond. Investment, cooperation and diversification give that response practical substance. Strategic judgment gives it direction. Neither can substitute for the other.
The end of the stability illusion
German industrial success is usually explained through engineering excellence, entrepreneurial discipline and high-quality production. These explanations are incomplete. Returns on those capabilities depended on a favourable international configuration: American security guarantees, access to international markets, Russian energy, Chinese demand and the European single market. What appeared to be the normal background of business was a particular political arrangement. Its durability was overestimated.
This does not mean that the preceding decades were peaceful or stable for everyone. It means that German export industries could treat several conditions of their own success as largely given. The OECD’s assessment of Germany identifies the pandemic, Russia’s war against Ukraine and rising trade tensions as major shocks to an economy deeply integrated into international production and trade (OECD, 2025). Waiting for their effects to pass is insufficient when the relationships underlying the business model are also being revised.
Globalisation continues, but access to its networks has become a more explicit object of political conflict. Decisions about production locations, energy supply and technology now require judgments about the interests of states as well as comparisons of costs. The expectation of a return to the conditions of 2019 obscures this change. A recovery strategy built around that expectation risks restoring exposures that have already proved costly.
Stuttgart is particularly affected because its industrial advantages are shared across a densely connected production system. Manufacturers, suppliers, engineering services and research institutions have learned to work together. Those connections support innovation and industrial scaling. They also bind many organisations to overlapping technologies and customers. The regional development agency reports approximately 220,500 jobs in the automotive cluster in 2022, including suppliers and automotive-related services (Wirtschaftsförderung Region Stuttgart [WRS].). The figure measures the wider cluster at that date; it illustrates the scale of the region’s dependence rather than a current employment total.
A cluster can consequently become vulnerable even when its individual firms are competently managed. Each company may reduce costs while the region loses capacities needed for its renewal. Each may enter an adjacent market while remaining exposed to the same dominant customers. The unit of strategic action must therefore extend beyond the individual balance sheet. Regional institutions need to address dependencies and opportunities that no firm can adequately assess or change alone.
Three forces changing industrial strategy
Geopolitical fragmentation changes the meaning of interdependence. Farrell and Newman (2019) show how states can exploit central positions in international networks to obtain information or restrict access. Their concept of weaponised interdependence explains why a payment infrastructure, a semiconductor supply chain or a digital platform can become an instrument of coercion. Commercial dependence acquires a political significance that is easy to overlook when exchange is assessed only through prices and delivery performance.
This requires what I would call political musicality: the ability to recognise that power and conflict follow logics of their own. It also requires resisting the convenient division of the world into dependable friends and dispensable rivals. The United States combines a security relationship with Europe with industrial interests that may compete with European ones. China can simultaneously be a systemic rival, a market, a production location and an important actor in ecological transformation. Strategic competence consists in managing these tensions and limiting exposure to coercion. Renaming the relationship does not resolve it.
Industrial transformation adds a second force. Decarbonisation changes energy sources, materials and production processes. Digitalisation and artificial intelligence change how value is created and how work is organised. In mobility, new drives interact with software-defined vehicles and connected systems. These developments cannot be managed as separate technical upgrades. Geels’s (2002) account of technological transitions places technologies within wider configurations of infrastructure, institutions and user practices. An electric vehicle needs a functioning charging and energy system; a new production technology needs an organisation capable of using it.
Vial’s (2019) review makes a similar point about digital transformation. Digital technologies prompt changes in value creation that involve organisational structures and processes. For an automotive supplier, stronger software capabilities can alter its relationship with customers, the qualifications it needs and the division of responsibility within development teams. Artificial intelligence raises further questions about which tasks are automated and which are performed jointly by people and machines. Raisch and Krakowski (2021) show that automation and augmentation are interdependent rather than neatly separable choices. Their relationship has to be managed over time.
There is little analytical value in calling all this an opportunity without specifying for whom. A technology can create a market while making an existing occupation or supplier business unviable. The decisions that shape the transition concern where new production takes place, which capabilities receive support and who bears the losses. A company’s organisational core also needs examination. Identifying it with the current product makes every technological change appear existential. Identifying it with a capacity to solve particular problems creates room to change, provided that this capacity can actually be transferred.
Systemic uncertainty is the third force. Knight’s (1921, Part III, chapter VII) distinction between measurable risk and uncertainty remains useful here. Some decisions permit estimates of probabilities under reasonably stable assumptions. Others concern situations in which the relevant relationships and possible outcomes cannot be specified with comparable confidence. A sales forecast for 2035 uses categories available in 2026, even though the durability of those categories is part of what is uncertain.
More information can improve the forecast without resolving that problem. Data do not decide when a market definition has become obsolete or when a formerly useful business distinction now conceals the relevant change. Geopolitics, technological transformation and uncertainty reinforce one another: political choices alter technical possibilities, new technologies redistribute dependencies, and both unsettle the assumptions on which investment decisions rest. Industrial strategy must examine its own framing while continuing to act.
Capabilities beyond the present product
Stuttgart’s specialisation creates vulnerability, but it does not exhaust what the region can do. Its productive knowledge reaches beyond vehicle components and existing production lines. Systems engineering, precision manufacturing and the translation of scientific findings into industrial applications can support activities with different markets and requirements.
Two examples make this tangible. Stuttgart-based Q.ANT reported the deployment of second-generation photonic processors at the Leibniz Supercomputing Centre in March 2026, placing light-based computing within an operational environment for evaluation (Q.ANT, 2026). TESAT in Backnang reported deliveries of optical satellite communication terminals to Lockheed Martin in December 2023 (TESAT, 2023). These are concrete industrial activities rather than promises of an eventual replacement sector. They show that the region’s technical capacities already find applications beyond automotive production.
It would nevertheless be a mistake to expect space technology, photonics or medical technology to replace the automotive cluster on equivalent terms. New activities differ in their scale, occupational requirements and location. The more plausible prospect is a family of capabilities connecting software and industrial AI with automation, sustainable mobility, energy and environmental technology, sensor technology, photonics and semiconductors. These fields offer directions for investigation. Their commercial and employment consequences need to be established case by case.
Research on regional branching helps explain how such development can occur. Neffke, Henning and Boschma (2011), studying 70 Swedish regions between 1969 and 2002, found that industries related to a region’s existing technological portfolio were more likely to enter it. Existing knowledge can therefore provide a basis for diversification. But relatedness does not establish feasibility. A component manufacturer entering medical technology still needs to meet unfamiliar regulatory requirements, develop different customer relationships and finance the interval before sales begin.
There is also a danger in remaining too close to familiar activities. Boschma (2015) distinguishes adaptation to prevailing conditions from the longer-term adaptability of a regional economy. Transfers from existing capabilities need to be combined with connections to knowledge outside established networks. Otherwise, diversification can reproduce the original dependence under a new sector label.
The practical task is to identify what transfers, what has to be learned and who can help. Universities and research institutes can test technical assumptions. Firms can establish customer requirements. Training institutions, workers and works councils can examine the changes in occupations and production practice. Employees’ experience matters because much of what makes a process reliable never appears in its formal specification. Treating them only as recipients of retraining discards knowledge needed to make the new technology work.
This is where industrial continuity acquires a useful meaning. The region needs to retain knowledge and productive relationships while allowing their applications to change. Public support should make clear which capabilities it is maintaining, for what prospective use and over what transition period. Protecting people and preserving transferable knowledge require a more discriminating approach than guaranteeing every existing product an indefinite future.
Investment and cooperation during the transition
Industrial renewal requires investment before its productivity gains become available. Existing production lines must continue to operate while new processes are developed. Mechanical and software-based architectures coexist; firms need skills for both. Energy infrastructure also has to support the transition between fossil and renewable supply. This overlap creates costs that cannot be removed simply by demanding greater efficiency from the old system.
The relevant distinction is between resources consumed without a credible purpose and resources needed to complete a transition. Maintaining two systems indefinitely can become wasteful. Financing their temporary coexistence can be necessary. Investment appraisal must therefore examine the path between configurations, including training, testing and infrastructure, rather than compare only the operating costs of their imagined end states. A supplier may have a viable future application and still fail because it cannot finance the passage to it.
Public investment helps establish the conditions in which firms can make that passage. Energy and transport networks, digital infrastructure, education and capable administrations are productive assets. The OECD (2025) identifies Germany’s infrastructure backlog and stresses the administrative capacity needed to implement investment. A new process has little economic value if grid connections or approval procedures prevent its use. Funding decisions and implementation capacity have to be developed together.
Decarbonisation belongs within this industrial task because it changes the material foundations of production. Energy efficiency, renewable supply, durable products and circular business models can reduce exposure to recurring resource purchases and vulnerable supply chains. Environmental improvement and industrial resilience can support one another when the production system is designed accordingly. This connection gives ecological modernisation a strategic significance beyond an additional corporate sustainability programme.
The connection is conditional. Electrification changes resource requirements rather than abolishing them. The International Energy Agency (IEA, 2025) documents increasing concentration in critical-mineral refining, especially for nickel and cobalt. Circularity can reduce reliance on primary materials over time, but recycled inputs cannot immediately meet all the requirements of expanding systems. Industrial renewal therefore needs to combine material efficiency and reuse with attention to processing capacity and reliable external relationships.
Cooperation is necessary because the relevant knowledge and resources are distributed. Grillitsch and Sotarauta (2020) distinguish innovative entrepreneurship, institutional entrepreneurship and leadership rooted in a particular place. Firms develop applications, other actors change the conditions enabling them, and regional leadership connects these efforts. A promising technical project can stall if nobody addresses the institutional obstacles to implementation.
CARS 2.0 provides an existing setting for transformation support in automotive and mechanical engineering in Stuttgart and Neckar-Alb. I see its strategic task as translation: making research usable in production, connecting technologies to viable business models and bringing employment requirements into investment decisions. Joint experiments can give this work substance. A demonstrator should establish what an application can do under production conditions; a shared training programme should address needs that smaller firms cannot meet separately. Collaboration becomes useful when participants commit resources and accept responsibility for a next step.
Rodrik’s (2004) account of industrial policy as strategic collaboration explains why neither public authorities nor firms can assume that they already possess the information needed for restructuring. They have to discover obstacles together. In an established cluster, this process also needs access for smaller suppliers and new entrants. Regional needs cannot simply be equated with the requirements of the largest incumbent supply chain.
Qualification and participation belong inside this process from the beginning. The ILO’s just-transition guidelines connect social dialogue with skills development and social protection (ILO, 2015). Workers need time to learn, access to training and a credible account of their future role. Where jobs disappear, support must address actual employment prospects. A transition that distributes losses without meaningful participation can destroy the trust on which implementation depends. Technical success alone does not make a regional strategy successful.
Europe and the diversification of dependencies
Some conditions of regional agency have to be created elsewhere. Stuttgart cannot by itself organise international trade, secure critical-mineral processing or establish the scale needed for major industrial platforms. European institutions provide a means of addressing problems that exceed the powers of a region or a single national economy.
Draghi’s (2024) report on European competitiveness connects industrial development with decarbonisation and the reduction of strategic dependencies. Its emphasis on the single market matters for regions whose capabilities need larger markets, interoperable infrastructure and common standards. Europe becomes a practical condition of regional strategy when these functions are specified and implemented. An appeal to European sovereignty without decisions about investment and coordination offers little help to a supplier deciding where to commit its resources.
Strategic autonomy means being able to choose within interdependence. Europe will continue to import resources, cooperate on technologies and serve external markets. The issue is whether alternative courses of action remain available when a relationship becomes difficult. Diversification must therefore examine the dependencies behind suppliers and locations: several contractual partners can still rely on one processing facility or technological platform.
Canada illustrates the possibilities of partnership based on complementary capabilities. Agreements announced during the German chancellor’s visit in August 2022 included cooperation on batteries and critical minerals, as well as the establishment of a hydrogen alliance (Global Affairs Canada, 2022). These commitments provide a documented starting point for connecting resource access with industrial development. Their strategic value depends on implementation. For Stuttgart, the relevant question is where its knowledge of vehicles, production systems and engineering can contribute to mutually useful projects.
Shared principles matter, but they do not remove differences of interest. Reliable cooperation needs workable commitments and benefits for both parties, with labour conditions and environmental responsibility taken seriously. Diversification also requires continued engagement with difficult partners. Reducing one-sided dependence does not by itself call for withdrawal from China or the United States. It calls for developing the capabilities and relationships that make a choice possible when interests diverge.
Regional actors can organise capability transfers and production experiments. National and European institutions can address the infrastructure, markets and external relationships beyond regional competence. Keeping these responsibilities connected allows local knowledge to inform decisions taken at the scale at which they can have an effect.
Strategic judgment and responsibility
None of these arrangements eliminates the need to decide before the outcome is known. Heinz von Foerster (2003) locates freedom and responsibility in questions that no predetermined procedure can settle. I have discussed the implications for Urteilskraft, the capacity for strategic judgment, elsewhere. For an industrial region, the important extension is that this capacity needs institutional support. It depends on whether different experiences can enter the discussion and whether assumptions can be challenged without the challenger being treated as an obstacle to change.
A cost calculation can identify the cheapest location under stated criteria. It cannot decide which dependencies are acceptable. An investment model can compare returns under specified assumptions. It cannot settle how much short-term profitability should be sacrificed to maintain a capability. AI can support decisions, but the scope of its authority must be justified by people accountable for its consequences. These questions concern purposes and responsibilities as well as technical possibilities.
Peter Ulrich’s (2008) integrative economic ethics makes clear why ethical justification must precede optimisation. Economic rationality already assumes judgments about desirable ends and legitimate conduct. I take his ordering seriously: first establish what can be justified to those affected, then optimise its implementation. This does not make difficult choices easy. It prevents a technically competent appraisal from silently deciding questions it has no authority to settle.
Judgment develops through experience, exposure to other perspectives and the willingness to reconsider one’s categories. It is poorly served by the image of a solitary leader who sees what everyone else has missed. In a region, firms, workers, researchers and public authorities observe different aspects of the same transformation. Their disagreements are resources for judgment when a process makes their reasons visible and assigns responsibility for the eventual decision.
Transformation networks can provide such a setting. Alongside technical experiments, they can test how a proposed course of action appears from different organisational and occupational positions. Collective judgment does not require consensus. It requires a defensible decision, a clear account of the assumptions behind it and conditions under which it will be reviewed. Within individual organisations, this also means giving someone the mandate and protection to raise responsibility questions before an approved calculation turns them into implementation details.
Orientation without certainty
Stuttgart’s prospects depend on capabilities it already possesses and on choices it has yet to make. Its industrial knowledge gives it a basis for renewal. Investment makes new applications possible; cooperation connects the knowledge needed to develop them; European coordination and international partnerships widen the available options. The outcome will depend on how these elements are put together and on whether the people sustaining the region’s production have a credible place in its future.
Confidence under these conditions is a reasoned trust in the capacity to act together. It needs evidence: projects that can be tested, institutions that can implement decisions and opportunities that people can recognise in their own working lives. No forecast can guarantee the next successful industrial configuration. What can be developed is the ability to judge and act while that configuration is still taking shape.