German Machine Tool Industry Orders still positive despite weakening growth

Index , nominal 160

12 months moving average original values

120

80

Order intake , % change to previous year

40

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Order bookings in the German machine-tool industry ( source : VDW ).

Note : Index basis shipments 2015 = 100 , data until September 2022 , Sources : VDMA , VDW

According to the VDW ( German Machine Tool Builders ’ Association ), orders received by the German machine-tool industry in the third quarter of 2022 were nine per cent up on the previous year ’ s figure . Orders from Germany rose by three per cent , whereas those from overseas were up by 12 per cent . Demand rose by 26 per cent in the first nine months of 2022 . Domestic and overseas orders contributed in equal measure to this , accounting for growth of 25 and 26 per cent respectively .

“ Our industry ’ s orders have held up well so far , despite all the adverse factors . Although the growth is clearly slowing , both September and the third quarter ( as a whole ) are positive ,” said Dr . Wilfried Schäfer , Executive Director of the VDW . “ However , there was an eight per cent increase in producer prices in the machine-tool industry in the third quarter . The effect of this was that earnings stagnated on a price-adjusted basis . As we are seeing everywhere , inflation is eating away at our growth ,” Schäfer continued .

Orders for the year are nominally only seven per cent below the record volume posted in 2018 . This record level has been matched overseas . However , the figures from the domestic market are one fifth below it . At the same time , capacity utilisation rose to just over 90 per cent this October .

“ The supply bottlenecks are now easing slightly , it seems ,” Schäfer said . This is evident from sales , which have also increased by ten percent in the first nine months , said the VDW .

“ Machining is the larger sector in the machine tool industry , and with its heterogeneous customer base , is outpacing the forming sector , posting a 17 per cent increase . Forming is dominated by the pressing sector ; it is often used in largescale projects and is characterised by less prominent cyclical swings . Sales here are down six per cent in the first three quarters of the year . However , this can be explained by the strong base from the previous year . Forming technology grew by a fifth in 2021 , while for machining the figure was only three per cent ,” added the VDW .

The sector expects to see orders cool noticeably in the fourth quarter . Germany and Europe , in particular , are lagging behind , while Asia and America , which have been less affected by the energy crisis , are expected to perform more solidly .

“ Nevertheless , we will finish the year with overall growth in production ,” said Schäfer , summarising the outlook . The sizable backlog will ensure that production remains high , as it takes time to process the orders , he explained .

Orders in the forming sector remain positive

Dr . Wilfried Schäfer .

Orders received by the German metalforming technology sector in the third quarter of 2022 were seven per cent up on the previous year . Orders from Germany fell by one per cent whereas those from overseas were up by ten per cent . Demand rose by 15 per cent in the first nine months of 2022 . Domestic sales were up two per cent while overseas sales rose by 21 per cent .

“ Producer prices in the machine-tool industry rose eight per cent in the third quarter . On a price-adjusted basis , earnings will be slightly lower as a result . The forming and machining sectors have diverged recently . Machining grew twice as strongly as forming in the first three quarters of the year . Domestic customers are also still investing in machining equipment , with a two-digit increase posted , while forming ( which is predominantly project-based ) is only showing a nominal two per cent increase ,” outlined the VDW .

At the same time , capacity utilisation in the metalforming sector rose to 94.3 percent in October this year .

“ However , sales are down six per cent in the first three quarters of the year . This is explained in part by the supply bottlenecks , but also by the strong base from the previous year . In 2021 , sales had grown by a sizable twenty per cent ,” explained Schäfer .

The German machine-tool industry ranks among the five largest specialist groupings in the mechanical engineering sector . In 2021 , with an average of 64,900 employees ( firms with more than 50 staff ), the sector produced machines and services worth around 12.7 billion euros . n

ISMR December 2022 / January 2023 | ismr . net | 7