German companies bet on AI but payoff could be years away

From automating processes to optimizing supply chains, German companies are resorting to AI tools for a growing range of functions. The technology is expected to make work more efficient by cutting repetitive tasks and freeing employees up for new, higher-value jobs.

Productivity growth in Germany, like in many other industrial countries, has stalled in recent years, a trend that has economists worried about possible long-term implications as the population ages.

The popularity of OpenAI’s ChatGPT chatbot since its launch in late 2022, followed by Microsoft’s Copilot and Google’s Gemini, sparked a wave of investments from companies globally.

Some businesses in Germany are optimistic that the technology could boost productivity.

“AI is probably the most transformative technological development in recent decades. It will fundamentally change tasks and qualification profiles across all industries," said Carsten Knobel, chief executive at consumer-goods company Henkel.

The maker of Dial soap and Snuggle fabric softener has been training its workforce in AI, which it uses to automate processes in its adhesives business. In its production facilities, a central cloud server collects millions of data points from its machines equipped with sensors, analyzing and processing them with the help of AI to maximize efficiency and detect any flawed products or packaging.

Henkel is running a number of pilot projects with technology partners like SAP, Adobe and Microsoft. However, Knobel says it is almost impossible to predict how the company will use AI in five years’ time given how fast the technology evolves.

Many German companies are at an experimental stage regarding AI, said Inga Fechner, ING’s senior economist for Germany. Data-protection concerns, workforce skills and lack of use cases are holding them back, and some are waiting to see what others do before acting, Fechner said.

In Germany, the proportion of companies with more than 1,000 employees that deploy AI as part of their business operations stands at about 32%, with a further 44% exploring its use, according to the latest IBM Global AI Adoption Index. This puts Germany behind the countries that lead in AI enterprise adoption—India, the United Arab Emirates, Singapore and China, all of which have deployment rates above 50%—and the global average of 42%, according to the IBM report.

When it comes to investment in AI startups, Germany—the world’s third-largest economy—is punching below its weight too. Over the 2013-23 period, Germany ranked sixth in terms of private investment in AI, behind the U.S., China, the U.K., Israel and Canada, according to data from marketing-intelligence firm Quid cited in the AI Index report by the Stanford Institute for Human-Centered Artificial Intelligence.

Food-delivery firm Delivery Hero has been using machine learning since 2011, but only last year started investing at scale in generative AI, the technology behind ChatGPT that can generate text, images and other forms of content.

Tillmann Neben, senior director of data science at Delivery Hero, said the company uses generative AI to create food images for menus or help customers find niche restaurants through conversational search.

“AI isn’t replacing anyone or anything," Neben said. Instead, he expects the technology to bring new features and capabilities that will ultimately make the workforce more efficient.

“This technology allows our employees to automate time-consuming tasks in the fast paced nature of our business, such as content creation and customer support, while simultaneously increasing our employees’ productivity by giving them more time to innovate," Neben said.

While AI is a hot topic, research firm Gartner in November said its position in European corporate IT budgets doesn’t reflect that for now. Gartner estimated IT spending in Europe would grow 9.3% this year compared with 2023 to reach $1.1 trillion, but said AI wasn’t a priority, with companies focused on other factors such as generating revenue, maintaining profitability or bolstering security.

Meal-kit company HelloFresh has been investing in machine learning and AI for more than six years. Chief Technology Officer Valeri Liborski expects that, over the next five years, AI will optimize a large part of what today is still a manual decision-making process.

HelloFresh is investing in AI to improve demand forecasting, optimize its fulfillment centers and streamline customer care, hoping to use the technology to personalize customer experience, from marketing content to recipes, he said.

“The technology will by no means replace creative minds, but will make the work of the teams more efficient and enable them to respond even more individually and successfully to the different needs of the target groups," Liborski said.

For individual companies, it makes sense to invest in AI, but it is hard to see a boom at the macroeconomic level, at least in the next two to three years, said ING’s Fechner. “It won’t be this huge game changer in terms of productivity if you consider positive effects and negative effects," she added.

Gerresheimer, which makes vials and packaging for pharmaceutical products, said AI would help it optimize production, supply-chain management and equipment maintenance and plans to train employees on how to leverage AI at work.

Despite its push to digitize and automate processes, Gerresheimer aims to hire roughly 3,000 employees globally in the next few years, a sign that AI won’t result in a lower headcount, a spokeswoman said.

While some businesses insist that AI won’t replace human labor, Henkel’s CEO Knobel conceded that some roles will, at least partially, be replaced by AI. However, he is convinced that AI can’t replace workers altogether since the technology will depend on human capabilities to thrive.

“The opportunities of AI are diverse for companies like ours," Knobel said.

Write to Nina Kienle at nina.kienle@wsj.com