Science and Innovation
Factsheet No.5 (July 2007)

The Fraunhofer Society (Fraunhofer-Gesellschaft, FhG)

By Muzinée Kistenfeger (mailto:research.berlin@fco.gov.uk)

The Fraunhofer Society (FhG) is one of Germany’s four non-university research organisations and focuses on applied research. The current number of FhG institutes has increased to 56. They undertake contract research for the public sector, government, and industry, including small and medium-sized enterprises (SMEs), which lack the critical mass to carry out their own R&D. Members of the institutes play an important role in the promotion of young scientists through university teaching. The FhG also acts as an adviser to government and industry on research-related issues, particularly on the commercialisation of new technologies and innovation.

Structure and Priorities

The Fraunhofer Society’s headquarters are based in Munich. Professor Hans-Jörg Bullinger, the Society's President, also chairs the Executive Board of the FhG. The Senate, which comprises representatives from industry, science and government, sets research priorities and determines the allocation of resources to the institutes on the basis of advice from the Scientific and Technological Council (WTR). Since April 2006, the FhG also has a Managing Director for Research Planning, Dr. Ulrich Buller.
The Fraunhofer Institutes focus on eight priority areas:

  • materials technology and component behaviour;
  • production technology;
  • information and communications technology;
  • microelectronics and microsystems engineering;
  • sensor systems and testing technologies;
  • process engineering;
  • energy and construction technology, environmental and health research;
  • technical and economic studies and information transfer.

In order to maximise their potential, the FhG institutes form cooperative alliances, thus jointly offering their services on the market. Currently, there are seven cooperative alliances, which also advise the Executive Board on structural and business development within their research field. They are (figures for 2006):

  • The Microelectronics Alliance is by now the largest strategic alliance within the FhG (10 institutes, total budget 221 million Euro)
  • The Materials and Components Alliance (12 institutes, total budget close to 204 million Euro, a 5% increase over 2005)
  • The Information and Communication Technology Alliance (the largest IT research group in Europe composed of 16 institutes, with a total annual budget of ca. 168 million Euro )
  • The Production Alliance (8 institutes, total budget ca.140 million Euro)
  • The Surface Technology and Photonics Alliance (6 institutes, total budget 86 million Euro)
  • The Life Sciences Alliance (5 institutes, total budget 57 million Euro, almost 9% increase over 2005)
  • The Defence and Security Alliance (6 institutes, 39 million Euro additional funding from the Federal Ministry of Defence)

The FhG, formerly focusing mainly on engineering sciences, has also developed research capacities in the area of life sciences. Five of the Fraunhofer Institutes pooled their biotechnological expertise in a “Life Science Alliance”. They conduct research in the field of bio- and genetic engineering, medical technology, pre-clinical and clinical research and environmental research and protection. The goal of the alliance is to promote the industrial development of biotechnology and thus link basic research and industry production. In June 2005, the Fraunhofer Centre for Molecular Biotechnology CMB in Newark, USA, received a grant of $ 1,2 million from the Bill & Melinda Gates Foundation for the development of a vaccine against the African Trypanosomiasis (sleep sickness).

In terms of research strategy, the Fraunhofer Society is directing its efforts toward as-yet-undeveloped markets for products that might take over five years to mature. In the area of nanotechnology, the FhG institutes focus their research on nano-scale materials, nanophotonics, and nano-analytics. The Fraunhofer Centre Nanoelectronic Technologies CNT in Dresden is member of a newly established research platform for nanoelectronics, which received € 232.5 million of public funding from the European Commission. Other priority areas of research are mobility and energy technologies. Since 2003, the FhG started playing a key role in an initiative of the German Federal Government to promote innovation. FhG experts selected and made public a series of twelve leading-edge technologies assessed as having a good future market potential. They also pinpointed areas of activity meant to facilitate innovation and the quick translation of ideas into high-quality products.

Facts and Figures about the Fraunhofer Society (figures for 2006)

The Fraunhofer Society’s 2006 budget was 1,186 million Euro (£1=€1.45), 67 million less than in 2005. The Fraunhofer Society has three main sources of income:

  • Institutional funding provided by the federal and states (Länder) governments on a 90:10 basis, (a total of € 330 million in 2006 plus an additional € 39 million from the Federal Ministry of Defence. )
  • Public-sector project grants from federal and states sources and the EU (€ 303 million, an increase of € 14 million over 2005. EU projects accounted for € 51 million)
  • Industry funding from contract research (some € 399 million in 2006. Industry research provides close to 39% of the FhG total income).
  • Others (investments, assets etc. €115 in 2006)

Close to two thirds of the FhG’s annual budget of over € 1,186 million is covered by contract research carried out on behalf of industry, the state and public institutions. Public-sector project grants have only marginally increased in 2006 (some 5%), a trend which, the FhG management believes, will continue in 2007. Income from industry contracts however stagnated after a hefty increase by 35% in 2005. This included the high revenue from the MP3 licence (ca. € 100 million in 2005). The budget difference for 2006 is due to the decrease of this MP3 licence-related income. The Fraunhofer Society employs 12,775 staff.

Technology Transfer

Fraunhofer Institutes focus on applied research and development but an amount of strategic and precompetitive research is also undertaken. Research is usually conducted in the form of projects funded from public-sector grants or by industry, mainly SMEs. The latter include customer-specific solutions to companies’ problems, for instance the adaptation of specific processes or technologies in accordance with company requirements. With an annual staff fluctuation rate of 10%, the Fraunhofer Society continuously transfers technologies and expertise into industry. The FhG has introduced three mechanisms to promote the transfer of research into industrial applications:

  • Application Centres (Anwendungszentren) are based at individual institutes and form a platform for contract research for the specific needs of industry.
  • Innovation Centres (Innovationszentren) seek to bridge the gap between applied R&D and the introduction of new products on the market. An innovation centre located in Bavaria specialises in telecommunications engineering.
  • Demonstration Centres (Demonstrationszentren) combine the expertise of several Fraunhofer Institutes to improve the R&D infrastructure in priority areas. These centres also provide training opportunities and consultancy services for SMEs.

Patent and Licensing Activities

In 2006, the Fraunhofer Society raised its total number of active German patents to 2211. Most of them come from the engineering and microtechnology areas. The FhG also restructured its central patent and licensing agency (PST, Fraunhofer Patentstelle). The department devoted to advising and supporting the Fraunhofer Institutes was moved to the FhG headquarters. The remaining PST has an annual budget of close to € 3 million, less than 30 staff and now offers "patent services for the German research". Ca. 50 % of the budget is own revenue from licensing, projects and consultancy activities. The PST is mainly responsible for providing consultancy on patent issues to SMEs, universities and non-university research facilities.

In 2006, the FhG reported € 92 million of license revenue. The most successful license of the FhG is the MP3 licence. Alone, it generated € 69 million of revenue in 2006 (down from € 100 million in 2005). The Society now decided to set up a Fraunhofer Foundation in order to manage this revenue. Its role will be to fund patent-oriented research projects in order to ensure future competitiveness and support the institutes in setting new trends of innovative research.

Spin-offs and Spin-ins

Over 300 companies have been spun off from the Fraunhofer Society since the early nineties, mainly in such areas as information technology, life sciences, material research and environmental engineering. The Fraunhofer Venture Group was established in 1999 to support spin-offs by providing counselling on start-up funding and business plan design. It also offers access to a network of consultants, venture capitalists and banks. The Fraunhofer Venture Group takes out partnerships, usually by providing technology licences. To a limited extent, it also provides seed capital. In 2006, the Venture Group took forward 38 projects and achieved six spin-offs.

The FhG also experiments with a new strategy: the spin-ins. The FhG Institute for Ceramic Technologies and Systems in Dresden for example, developed an innovative ceramic SOFC (fuel cell). Two industrial companies have now set up a joint new company within the Institute, Staxera, which will help drive the new product toward serial production. Staxera integrates staff from the FhG and is 100% financed by the project partners.

International Activities

The FhG’s revenue from international projects increased in 2006 to € 120 million. EU-funded projects generated € 51 million in 2006 (an increase by 22% over 2005). Revenue from non-EU European research projects was of € 42.2 million. The Fraunhofer Society has a US subsidiary, Fraunhofer USA, which operates research centres from five locations. They focus on laser technology and laser applications, biomedical engineering, production technology, manufacturing innovation and software engineering. The centres aim to transfer local expertise into the Fraunhofer Society and to increase its customer base overseas. Fraunhofer USA had a rather constant revenue of ca. € 10-13 million per annum during the last three years. The FhG has also established five Representative Offices in South East Asia focusing on marketing and business expansion. Further Fraunhofer Representative Offices opened in Brussels and in Moscow. The FhG and its Brussels office were involved in the development of the EU "Strategic Research Agenda", which was used as a basis for defining the production technology area of FP7.

In 2001, the Stuttgart-based Technology Development Group (TEG) of the Fraunhofer Society initiated a partnership with the UK technology development and commercialisation agency Pera. TEG and Pera completed the first of 12 CRAFT (Cooperative Research Activity for Technology) collaborative projects. In 2002, the TEG also became a partner of PRIME-Faraday and opened its first UK office in Melton Mowbray. Several FhG institutes are actively involved in the mechatronics field of research and will join in the collaboration with UK universities, SMEs and KTNs.

Looking ahead: future priorities and the young generation

In order to promote networking and know-how transfer, the FhG initiated a number of "innovation clusters", networks built around one or several Fraunhofer institutes and involving academic research partners and industrial companies, mostly SMEs. The Fraunhofer Society and the federal and local state governments jointly fund these networks. The first four clusters cover mechatronics and machine engineering in Chemnitz, optic technologies in Jena, digital production in Stuttgart, and medical technologies ("Personal health") in Erlangen-Nueremberg. Three more clusters were set up in 2006: "Nano for production" in Saxony, "Automotive Quality" in the Saar and "Digital Automotive Technology" in Kaiserslauten.

Another priority of the FhG in the next year is consolidating the beginning cooperation with the prestigious Max Planck society of basic research in order to better exploit synergies. In 2006, the two societies have started three long-term jointly-funded cooperation projects.

FhG Institutes generally offer university graduates training opportunities in various technological areas. In 2006, the Fraunhofer Society in cooperation with several universities set up a Technology Academy offering master degrees in technology managing, logistic engineering, and environmental sciences. It targets young academics, who have worked at least 5 years in industry and have reached a managing level. The Technology Academy offers courses as of September 2006.

Further Information and Literature

English-language information on the Fraunhofer Society with links to all institutes is available on the Internet at http://www.fraunhofer.de. The FhG publishes a number of English-language brochures, including a guide to its research establishments and sectoral publications on priority research areas. The Society also publishes a regular newsletter “Research news” and a bilingual German/English guide to its institutes on CD-ROM. The annual report 2006 is available in German. Copies of these may be obtained via the Internet or from:

Fraunhofer-Gesellschaft e.V.
Hansastrasse 27c
80686 Munich, Germany
Tel: +49 89 1205 0
Fax: +49 89 1205 7531
E-mail: fraunhofer.presse@zv.fhg.de
or Info@fraunhofer.de

For information on the UK office of the Fraunhofer Technology Development Group please contact:

Dipl. Ing. Harald Egner
Tel: +44 1664 503 780
Fax: +44 1664 501 589
Melton Mowbray
Leicestershire, LE 13 0PB

Science & Innovation Section
British Consulate-General Munich
Möhlstrasse 5
D-81675 Muenchen
Tel: 0049 89 21109 112
Fax: 0049 89 21109 166

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