German machine tool production will remain at record levels in 2019
by David Fleschen
For 2019, the German machine tool industry expects a further increase in production of 2 percent to 17.4 billion euros from record levels. Heinz-Jürgen Prokop, Chairman of the VDW (Association of German Machine Tool Factories), in Frankfurt on the occasion of the association's annual press conference. Production may benefit from the good performance of the previous year in 2019. The existing order volume will only be realized out of phase in the current year, Prokop continues.
In addition, the British economic research institute Oxford Economics, forecasts partner of the VDW, expects an increase of 4 percent and a plus of 3 percent in machine tool consumption for the investments of the most important customer industries in Germany. "Both indicators are relevant to industry development and are growing well," says Prokop. Added to this is a high level of capacity utilization among customers and the trend towards more networking and automation, which requires further investment.
The positive factors are offset by the slowdown in orders. They turn after a moderate increase of 1 percent in the last year 2019 with 2 percentage points discount slightly into minus. In the process, strong domestic growth is slowing down by minus 3 percent.
By contrast, foreign orders are expected to maintain their level in 2019. The clear growth driver remains America. According to VDW's own survey for the first three quarters of 2018, US demand has already risen by double digits, fueled by spending programs, tax cuts and improved write-offs in the US. Canada and Mexico were also up. For the current year, another US-driven growth of 4 percent has been announced.
Asia also remains positive. Orders from China, South Korea and Taiwan declined. However, assets are Japan and the Asean region. Europe, on the other hand, is now heading for a slight decline of 2 percent in 2019 following a surge in demand over the past three years. By 2018, the euro countries in particular had still proven to be rock solid with 9 percent plus. In addition, the driving forces are shifting from southern to eastern Europe, where the automotive industry is investing more again. This also promotes project business.
Export accounts for around 70 percent of the machine tool business. He rose by 3 percent in 2018. Despite economic reassurance, China remains by far the most important market for German manufacturers. With a growth of 5 percent in the first eleven months of 2018, the country accounts for 22 percent of German exports, followed by the US with around 13 percent and an increase of 7 percent. By a large margin, 6 percent share, Italy is in third place. Exports to Italy have shot up by 21 percent, supported by depreciation allowances from the Italian government. Surprisingly, Poland has positioned itself in fourth place with an increase of 9 percent induced by orders from the automotive supply sector. Among the top 15 are also Switzerland and Spain with double-digit growth. Less well in France, Austria and India.
As expected, exports to Great Britain dropped by a whopping 15 percent. The United Kingdom now only consumes 2.5 percent of German supplies. "However, we assume that Great Britain will have to continue to buy German machine tools if the industry wants to remain competitive. Germany is the largest supplier, and there are only a few British manufacturers on the market, "Prokop is convinced.
The good economic situation of the German machine tool industry is also reflected in employment. At the end of 2018, 75,000 employees worked in the sector. That was 4 percent more than within a year.
"After the stormy growth of recent years, the economic reassurance now offers companies opportunities to set strategic course for the coming months. There are enough challenges, "says Prokop. The German manufacturers build on their international leadership position: world champion in export, runner-up in production, bronze in consumption and import. This position must be maintained and expanded.
Example networking in production: With the development of the standardized interface umati (universal machine tool interface), the machine tool industry has taken the initiative to promote networking in production. umati allows the exchange of data from machines of all makes with higher-level IT systems in order to be able to analyze and evaluate them. The advantage: Open interfaces and uniform specification.
Source: VDW, photo: fotolia