German machine tool industry running into very good form

In the second quarter of 2016, order bookings in the German machine tool industry rose by 16% compared to the preceding year’s equivalent period. Domestic orders were up by 19%, while demand from abroad increased by 14%. The eurozone contributed growth of 37%, and non-eurozone nations a ten-per-cent rise in orders. In the year’s first half, order bookings increased by a substantial twelve% compared to the preceding year’s figure. While domestic order bookings rose by ten%, orders from abroad were also up, by 13%.

All in all, order bookings are developing auspiciously. “The year’s second quarter, too, signals a green light for an overall rise in orders during the current year. Our business is running significantly better than we expected at the beginning of the year. The sector can point to a sound, balanced performance over the year’s first half,” comments Dr. Wilfried Schäfer, executive director of the sectoral organization VDW (German Machine Tool Builders’ Association) in Frankfurt am Main.

The higher level of demand results primarily from good domestic business, and in particular from automotive projects in China and Mexico. Thus the substantial rise in orders is equally attributable to both domestic orders and exports. With reference to the first half of 2016, one-off effects are primarily responsible for the auspicious order situation. Abroad, machining centersand milling machines are benefiting particularly from large-scale orders. All other metal-cutting technologies, plus significant areas of forming technology, however, are performing less well in terms of orders from abroad. On the domestic scene, by contrast, the picture is somewhat different.

“Metal-cutting is two% up, and the current as-is situation gives reason to hope that a broad spectrum of technologies can benefit from this,” Schäfer says.

Turnover in the first half of 2016 ended up slightly better than break-even.

“In view of the encouraging development of orders in the year’s first six months, and the range of order backlogs, now recovered to over seven months, we are anticipating a perceptible rise in turnover for the upcoming period,” Schäfer says.

This, he added, is conditional on demand levels remaining stable in the year’s second half as well, particularly on the domestic market. Germany’s industrial sector is in good shape, and exhibits impressive pricing structures and competitive efficacy. The ifo Business Climate Index, for instance, contrary to analysts’ expectations, recovered again in July.

“Despite Brexit, the business cycle is holding up well, and showing no significant signs of deterioration,” Schäfer explains.

Employment remains at a high level. This is an indication that the German machine tool manufacturers, despite cyclical fluctuations, are keeping themselves fit to face the challenges of the future. “The sector is entering the year’s second half in improved condition, and is continuing to invest in qualified staff,” Schäfer emphasizes. In May 2016, almost 69,000 people were employed in the machine tool industry – a slight increase of around one% over the preceding year.

Background

The German machine tool industry ranks among the five largest specialist groupings in the mechanical engineering sector. It provides production technology for metalworking applications in all branches of industry, and makes a crucial contribution towards innovation and enhanced productivity in the industrial sector as a whole. Due to its absolutely key role for industrial production, its development is an important indicator for the economic dynamism of the industrial sector as such. In 2015, with around 68,500 employees (annual average for 2015, firms with more than 50 staff), the sector produced machines and services worth around 15.1 billion euros.


Date:Aug 17,2016
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