"We would probably still be able to do without artificial intelligence. But digitalization is crucial for the future. Without it it will no longer work." That's what Herbert Zahnen says. He is the managing director of the mechanical engineering company “Zahnen-Technik”, which produces water treatment systems.
The 57-year-old is currently at the plant with some trainees in the so-called “Innovation Lab”. The young people sit here in front of screens and tinker with programming codes. The trainees used to work on huge systems. They still do this in their training today. Today, there is also the ability to program in-house AI.
Zahnen has been managing director of the company in the Eifel for 35 years. The medium-sized company supplies waterworks or sewage treatment plants. In addition to machines, the company also develops suitable digital products for wastewater treatment. “Municipal utilities, for example, always have the problem that wet wipes clog wastewater pumps in the sewer network,” explains Zahnen. "Our AI detects potential blockages two weeks in advance. This means the pump can be flushed and cleaned in advance - with significantly less effort."
Artificial intelligence has been a topic in the company for more than five years. That was initially a challenge for the workforce, remembers Zahnen. "At first we just experimented a bit." AI is now an integral part of the company.
The training and skilled workers strategy was also aligned with this. The company trains its own staff in order to remain competitive at its location in the Eifel. In the region near the border, some companies, especially in Luxembourg, attract people with good salaries. “We are trying to digitize and automate everything that is possible. That is not a job killer. On the contrary: AI does the work of skilled workers who can no longer be found anyway,” says Zahnen.
This will even lead to new jobs. "An example: Until now, we needed an electrician to build a control cabinet. With AI, beginners can now wire such systems. There will be new opportunities for career changers without special training."
Mechanical engineering is still in a structural crisis - even if there is some hope for improvement. According to the industry association VDMA, the industry has to cope with its fourth year of decline in a row: production in Germany is expected to shrink by around two percent this year. The causes include high costs for energy, raw materials and personnel. Added to this are the weakness of the automotive industry as the main buyer and global political uncertainties.
But the Association of German Mechanical and Plant Manufacturers (VDMA) reported a surprisingly significant increase in orders of 14 percent compared to the previous year in late summer. In addition to the export business, the expansion of AI data centers and the associated energy, cooling and automation technology also ensures a significant increase. The defense industry is also generating more orders. The capacity utilization of the plants and plants has therefore stabilized and recently climbed to 85 percent - still a low value, but at least the best in two years.
AI is now seen as an important future technology in the industry - especially for retaining staff and reducing costs. According to VDMA data, 31 percent of mechanical engineers are already using AI, and another 37 percent are carrying out pilot projects. The AI ratio in medium-sized companies is still lower than in large corporations, but is growing significantly.
However, German companies are lagging behind overall in global competition. In 2026, US industrial companies will invest an average of 2.9 percent of their sales in artificial intelligence - German industrial companies will only invest 0.6 percent. The management consultancy Horváth comes to these results.
According to the industry association Bitkom, they have a good chance of catching up: German “hidden champions” in particular have decades of highly complex specialist knowledge that pure software companies cannot simply copy.
This means you have exclusive knowledge of real machine data. Manufacturers therefore have direct access to highly specific operating and sensor data - the basis for industrial AI. The data from the machine movements can be translated directly into software. In addition, there is traditionally a close relationship with research companies and universities in Germany.
“The competition is getting tougher. We are also feeling that,” says Herbert Zahnen, summing up the financial year so far. Since Zahnen-Technik's business customers are primarily public clients, the numbers have remained good so far. “There are no slumps in this area. Unfortunately, things are completely different in parts of the industry,” said the managing director.
However, the company also suffers from the well-known location disadvantages in Germany - especially from increasing bureaucracy. The regulations are becoming more and more detailed, says Zahnen. "The requirements for the construction of plants are becoming more and more complex. This delays and blocks investments and ultimately affects us." He is observing that this is also causing problems for more and more authorities in municipalities. There, too, there is an increasing lack of staff to quickly check the procedures.
When looking at the near future, Zahnen is optimistic - also because of artificial intelligence. Above all, the price pressure on German competitors from international competitors will increase. “I can say that we are at the forefront of water management worldwide,” said the managing director. "The competition never sleeps. AI will increase productivity and thus reduce prices in international competition. We can keep up here - thanks to our own AI."
