The true is that with begining of war german wasn't fully preapred. Many generals was afraid of invasion to France (that was planned before the invasion to poland) or invasion to poland. The lack of agreement with Poland (they didn't wanted to loose the Gdansk (Danzig) build exteritorial higway from germany to east prussia) and making alliance with France and Great Britain forced Hitler to start thinking about invasion to Poland first (he choosed wisely because west allies used much often phone than guns),
The industrial machine in 30's was in bad shape - it's one of the reason why hitler gained so much popularity so quick. The industry was rising with start of breaking after-ww1 agreements (wich started around middle of 30's) and taking factories in occupied countries (Austria, Czech, Poland, France).
I agree they were much more technically advanced that the rest of the world - some historicians claims that they have complieted nuclear program
http://en.wikipedia.org/wiki/German_...energy_project
The usage of rocketry, jet propulsion, advances in tank / ship construction, building assault guns. But you have on the other hand - commonly used Katyusha (BM-13) turning german cities into ruins , cheap and mass produced tanks in Ussr, and Heavy Bombers ruining german cities and industry and A-Bomb in the west allies.