Table of contents
2. Description of the location and administrative structure
3. Important location factors of the tertiary sector
4. Location factors of Frankfurt am Main
5. Economic structure
5.1. sectoral structure and economic statistics
5.2. Major branches of Frankfurt am Main
When I thought about the topic of my research paper, I quickly decided I want to write about economy because I am interested in that topic. During my research, I came across the city, Frankfurt am Main. The facts that Frankfurt has a good working economy and an impressive skyline, which is unusual for German cities compared to American cities, were known to me. I asked myself why Frankfurt was so successful and if it may still develop, but I could not answer these questions. The main topic of this research paper is to answer this question.
At the beginning of my research paper, I would like to describe the location of the economic area of Frankfurt-Rhein-Main and consider which cities are members of this economic area. I will explain important location factors of the tertiary sector and examine Frankfurt am Main regarding the present location factors. I will do that with the help of the book “Wirtschaftsgeographie”, two editions of the book “Wirtschaftsstandort Frankfurt am Main” and several statistic reports.
I will focus on Frankfurt because it is the most significant city in the economic area. Afterwards, I will analyse the economic structure of Frankfurt and FrankfurtRhein-Main and compare them with the structure in the past. While analysing the current economic structure, I will elaborate significant branches in the economy of Frankfurt. At the end of this work, I will try to realize a trend and give a prognosis. I will conclude by answering the central issue, why the economic area could be so successful and if the potential may be exploited.
2. Description of the location and administrative structure
The region Frankfurt-Rhein-Main is a German metropolitan region. There are eleven metropolitan regions in Germany. The region was declared by the ministerial conference for Regional planning on April 28, 20051.
This chapter contains the localization of the Frankfurt-Rhein-Main region. The region is located between 7,6° East and 9,72° East and 49,4° North and 50,81° North in West-Central Germany and on the continent of Europe. The region extends across great parts of the federal state Hesse and smaller parts in Bavaria and Rhineland-Palatine2. The Rhein-Neckar metropolitan region is a neighbouring metropolitan region. Neighbouring federal states are Thuringia in the East and Stuttgart in the South.
The region consists of seven independent cities and 18 districts. For a detailed table of the cities and districts, see figure 2. The North-South expansion is 155 kilometres, and the East-West expansion is 165 kilometres3. The total area of the region is 1.475.530 square metres4.
3. Important location factors of the tertiary sector
This chapter concentrates on important factors of the tertiary sector. Every company must choose a certain location for their business operation. Entrepreneurs responsible for the company start-up must choose a location for their first office or production site. Other companies may think about additional offices, production facilities, or a resettlement. They all need suitable locations. This raises the question why companies search for a certain location and how they can determine the correct location.
The companies want to settle down at the location that fulfils the requirements they have. The aim is to find the location with the best possible conditions. Every company has specific requirements that should be met by the location. To find a suitable location, the companies must think about the location factors. The location factors must be compatible with the requirements of the company5. While figuring this out, the companies can filter out unsuitable locations. This decision is considered important because a resettlement can be expensive. As an effect, these decisions are often relatively firm.
The location requirements of a company depend on the sector and branch. A software company does not have the same requirements as a farm, for example.
Before explaining the important factors of the tertiary sector, it is important to differentiate the location factors. There are hard and soft location factors. Soft location factors cannot be easily calculated, in contrast to the hard location factors, which can be precisely calculated6.
An important location is the supply of labour. Whereas the price of the labour is important in the first and secondary sector, the quality of the labour is important for the tertiary sectors. This is especially the case for high-tech companies or other high valued services, like financial services or consultancy. The companies are willing to pay high salaries and expect good work (see chapter 5.2). These highly skilled workers make demands on the employer. They demand good living standards and environmental conditions7. Because of that, the soft location factors are often very important for the tertiary sector. Companies must attract the most qualified workers, and they can do that only by offering good conditions. Other soft location factors are culture, good education, and availability of leisure activities.
Nevertheless, soft location factors are especially important for the tertiary sector, and the hard location factors are important as well. Important hard location factors are the availability of land, labour, traffic infrastructure, communication infrastructure, proximity to the costumer, and financial incentives. Area is important for companies that offer services. Banks and law firms, for example, need many offices because they have many workers. Production facilities are not as important for the tertiary sector as they are for the secondary sector. Agglomeration is also advantageous for service companies. When there is a high concentration of companies of the same branch, cooperation is possible. The proximity of research facilities and universities is also very important, especially for high-tech companies, because these companies have a high demand for research and qualified workers.
4. Location factors of Frankfurt am Main
This chapter deals with the location factors of the city Frankfurt am Main. The analysis of the factors focuses on Frankfurt because it is the most significant location of the economic area Frankfurt-Rhein-Main, even though there are many other cities and districts contributing to the economic performance of the area. It is crucial to identify and to examine the location factor for answering the first part of the main question. Why is the economic region successful? Successful means, in our terms, the gross domestic product of that specific area is high. To have high gross domestic products, there have to be local companies in Frankfurt that create value. Companies must be attracted to settle down in the city. As explained in chapter three, every company chooses the location with the best possible conditions. So, what makes Frankfurt so successful?
The city is in the middle of Europe. The infrastructure of Frankfurt is excellent8. The airport in Frankfurt am Main is one reason the infrastructure is so good. It is the eighth largest airport worldwide9. 60.792.30810 passengers were transported in 2016. The total air freight of 2016 was 2.067.257 tons10, and there were 468.900 aircraft movements11. Almost all the European capitals can be reached within two hours from the airport in Frankfurt12. The road and railway network are developed. The total length of the roads in Frankfurt, which consists of federal motorways, federal roads, states roads, and country roads, is 368 kilometres long. The federal motorways A3, A5, A66 and A661 are in Frankfurt13. Up to 450.000 travellers use the railway system every day. It is “one of the most important traffic hubs in Europe.”14 For more figures about the railway system, please see figure 3. The public transport system works well with when travelling within the city centre and helps 300.000 commuters to reach their destinations15 every day. 13 ICE’s are connecting other metropolitans with Frankfurt15. A harbour port is located in Frankfurt as well. This harbour port is located near the motorways A661 and A661 and the railway system. It is also connected with other important waterways, like the river Rhine in the South-West near Mainz16. It is recognizable that the infrastructure is well developed. This is a major location factor of Frankfurt because many people depend on it. 444.920 commuters depend on a good working infrastructure and the other people in Frankfurt that use the public transport system. The digital infrastructure is extremely well-developed. The second most important and largest internet access point and hub is in Frankfurt17. The availability of glass fibre for private persons and enterprises is extensive18. This is important for the big companies in Frankfurt. These companies often have large office buildings and need a high bandwidth. This is technically only possible with glass fibre and is especially important for companies in the IT branch because they have a higher bandwidth for their service in contrast to other branches. This is a location requirement for most IT companies and given to a great extent in Frankfurt am Main.
This infrastructure “guarantees a rapid access to all-important key markets in Europe” 19 and makes the location attractive for customers and employees.
The reputation of Frankfurt is very good. Frankfurt is known for their world-class finance centre, service, and exhibition centre. The gross value added of the economic area Frankfurt-Rhein-Main is 8% of the one of Germany20. This shows the significance of the economic performance of this region and supports the good reputation of the region. The gross domestic product per capita in Frankfurt is 98.500€21. As a comparison, the gross domestic product per capita of Germany is 42.161,3€22.
This is a good incentive for potential employees. This shows the high productivity of Frankfurt and justifies its good reputation. The reputation is an important soft location factor, even though it cannot be measured. Many workers and companies would prefer a city with a good image over one with a bad image.
Another important location factor is education. Ten23 universities are located in Frankfurt. The Goethe-University, which is highly renowned, is a good example. 2821 universities are located in Frankfurt-Rhein-Main. There are 58.00021 university students in Frankfurt and 192.50021 university students in Frankfurt-Rhein-Main. These figures show the great education opportunities. This is important for an economic area dominated by the tertiary sector because the highly demanded workers must be highly skilled and qualified. These diverse education possibilities ensure there are as many potential qualified workers as possible in the region. There are also 13 international schools. This shows the extent of the internationalism of Frankfurt. The companies want to attract the best workers of the whole world. These international schools increase the attractiveness of Frankfurt in the eyes of foreigners because these schools can educate their children, even though they might not speak German fluently. These schools are also important because there are many foreign people in Frankfurt. “Almost 30 % of people in Frankfurt speak a foreign mother tongue.”24
Research facilities are also important for the tertiary sector. This requirement is fulfilled in Frankfurt. There are 35 research facilities21.
As mentioned, the labour force is an important location factor. The quality of the labour is important in the tertiary sector. The size of the labour force was 511.633 in 201325 and 679.000 in 201526. Clear development underlines the fact that the economy in Frankfurt is successful and still growing. These statistics are referring to the labour force of the year 2013. 93.01824 workers, about 18,18% of the total workers, are classified as experts. These workers completed at least four years of higher education or have excellent work experience. 95.10024 or about 18,6% of the workers are classified as specialists. Specialists are foremen who completed an apprenticeship24. But, although there is a great labour force, there are still 9.433 notified vacancies27. This shows the demand of the labour force is higher than the supply. The skill shortages can be problematic for the companies because they cannot find qualified workers. The data from the “Fachkräftemonitor”28 of Hesse prove the skill shortages in Frankfurt. It is visible in the figures 5-7 that the demand for economic science, management, and computer science is higher than the supply. Especially, the lack of economic science and management is large. These skill shortages result in higher salaries according to the principle of supply and demand. The importance and popularity of those jobs are underlined by the total amount of graduates in these subjects. There are many graduates in Darmstadt because the Technische Universität Darmstadt, a well-known university in the fields of science, is located there29. Considering the most demanded branch was the finance service, it is reasonable and good for the future of the region that there are many universities offering studies in that topic. Most universities with those studies are located in Frankfurt28.
1 Extracted: https://www.region-frankfurt.de/Regionalverband/Region-in-Zahlen/Statistik-ViewerRegionalverband/index.php?mNavID=2629.36&sNavID=2629.36&La=1#a2, status as of February 13, 2018
2 Cf. figure 1
3 Measured with the online service Google Maps
4 Cf. Stadt Frankfurt am Main, Bürgeramt, Statistik und Wahlen. Strukturdatenatlas Frankfurt, Frankfurt am Main, 2015
5 Cf. Palme, G. & Musil, R.: Wirtschaftsgeographie, Braunschweig 2012, page 11
6 Cf. Palme & Musil, 2012, page 15-16
7 Cf. Palme & Musil, 2012, page 14
8 Cf. Kirk, C.: Wirtschaftsstandort Frankfurt am Main, Darmstadt 2001, page 9
9 Cf: http://www.frankfurt.de/sixcms/detail.php?id=2556771, status as of February 18, 2018
10 Cf. Stadt Frankfurt am Main, Bürgeramt, Statistik und Wahlen. Statistisches Portrait / Statistical portrait Frankfurt am Main 2016, Frankfurt am Main, 2017, page 6
11 Cf. Industrieund Handelskammer, IHK-BEZIRK FRANKFURT IN ZAHLEN 2016|2017, Frankfurt am Main, 2017, page 6
12 Cf: http://frankfurt-business.net/standort-frankfurt/infrastruktur/, status as of February 18, 2018
13 Cf: https://www.google.de/maps/place/Frank-furt+am+Mainemail@example.com,8.3563599,10z/data=!3m1!4b1!4m5!3m4!1s0x47bd096f477096c5:0x422435029b0c600!8m2!3d50.1109221!4d8.6821267?hl=de, status as of February 18, 2018
14 Extracted: http://www.frm-united.de/en/location-advantages/frankfurtrheinmain-as-a-busi-ness-location/international-traffic-hub/, status as of February 28, 2018
15 Cf: https://exporo.de/standortanalyse/frankfurt-am-main, status as of February 18, 2018
16 Cf: https://www.google.de/maps/search/Frank-furt+am+Main+Hafenfirstname.lastname@example.org,8.5625057,12z , status as of February 18, 2018
17 Cf: http://global-internet-map-2012.telegeography.com, status as of February 18, 2018 and figure 4
18 Private research: information provided by a local Telekom store
19 Cf. Kirk, 2001, page 9
20 Cf. IHK-Forum Rhein-Main, FrankfurtRheinMain in Zahlen 2018, Hanau, 2018, page 2
21 Cf. Stadt Frankfurt am Main, Bürgeramt, Statistik und Wahlen. Statistisches Portrait / Statistical portrait Frankfurt am Main 2016, Frankfurt am Main, 2017, page 3
22 Cf: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&loca-tions=DE&start=1970&view=chart, status as of February 20, 2018
23 Cf: http://frankfurt-business.net/standort-frankfurt/zahlen-daten-fakten/bildung/, status as ofFebruary 18, 2018
24 Kirk, 2001, page 11
25 Cf. Stadt Frankfurt am Main, Bürgeramt, Statistik und Wahlen. Klassiﬁkation der Berufe 2010:
Erste Ergebnisse zu den Beschäftigten in Frankfurt am Main am 30. Juni 2013 (Teil 2), Frankfurt am Main, 2014, page 1-2
26 Cf. Stadt Frankfurt am Main, Bürgeramt, Statistik und Wahlen. Statistisches Portrait / Statistical portrait Frankfurt am Main 2016, Frankfurt am Main, 2017, page 3
27 Cf. Industrieund Handelskammer, IHK-BEZIRK FRANKFURT IN ZAHLEN 2016|2017, Frankfurt
am Main, 2017, page 3
28 Cf: http://www.fachkraefte-hessen.de/fachkraeftemonitor.html#ivmhirej2vik, an online tool provided by the Chamber of Commerce and Industry, status as of February 18, 2018
29 Cf. Planungsverband Ballungsraum Frankfurt/Rhein-Main, Wissensatlas Frankfurt, Frankfurt am Main, 2009, page 37-40