Racist or not, the offensiveness of a word can generally be found in its intent (the context in which it is used).
Granted offense is often taken when not intended, however in this context I personally find the use unnecessary.
Though that's possibly more to target a following as opposed to targeting the Germans (pure guess). If I'm correct I can still see how it could be taken as offensive, which could also explain why they may have apologised if they didn't intend to offend.
If I'm not correct and the person who said it was doing so to offend the Germans intentionally then they should apologise and perhaps their public position be considered.
I'm in no way defending either party as I do not know enough about the specific situation. Just trying to throw some light on why they may apologise if offence was not intended.