INDUSTRY NEWS
German machine tool production
In 2024 , the German machine tool industry is expecting production to decline by almost three per cent to 14.8 billion euros in nominal terms .
“ A nominal record volume of 17 billion euros was posted in 2018 / 2019 and , five years later , there is still no sign of this figure being matched ,” said Franz-Xaver Bernhard , Chairman of the VDW ( German Machine Tool Builders ’ Association ) at the association ’ s annual press conference in Frankfurt am Main , Germany , on 22 January 2024 .
“ There has been a clear slowdown in orders since the beginning of last year , which is now having an increasing impact on sales and production . The considerable order backlog , representing around eleven months ’ work , had helped . However , nearly all supply bottlenecks have since been resolved , allowing the backlog to be worked through more quickly . Accordingly , orders on hand are less and less able to compensate for the lack of new orders . Overall , orders fell by 10 per cent in nominal terms in 2023 . The decline was partly offset by several months of stronger project business . Domestic demand fell by 14 per cent , almost twice as much as overseas demand ,” added the VDW .
The global economy is unlikely to provide much impetus in 2024 , according to the VDW . The growth rates of both gross domestic product and investment are once again down on the previous year ’ s levels , it confirmed . It also pointed to the international purchasing managers ’ index which , it said , “ highlights the weakness of the global economy in all key markets , particularly in the eurozone and Germany .”
“ Growth sectors such as electric vehicles , wind power , medical technology , aerospace and defence boosted the project business in particular , while the standard machine business was weaker . Small and medium-sized customers ( such as jobshop businesses ) are uncertain about the future and are reluctant to invest . Machine purchases are also more difficult to finance due to higher interest rates . Companies that prepared for the transformation process at an early stage are therefore better able to weather the weak demand ,” explained the VDW .
Good results for 2023
Last year , the VDW estimates production to have risen by just under eight per cent in nominal terms , to 15.2 billion euros . In real terms , this represents an increase of two percent due to inflation , which remained at a high average level over the year . Exports grew by nine per cent . The export ratio reached almost 70 per cent .
“ German exports were boosted by double-digit growth in America . Asia and Europe , on the other hand , only recorded single-digit increases . The U . S . in particular saw extremely dynamic growth , driven above all by investment in climate protection and renewable energy . China , by contrast , experienced weak growth due to falling consumer demand and the ongoing difficulties in the real-estate sector . India , on the other hand , enjoyed sharp upward growth ,” confirmed the VDW .
“ At five per cent , domestic sales did not increase quite as much . This is attributable in part to the weaker demand from domestic customers . Averaging out at 89.6 per cent over the last year , companies had good capacity utilisation and also took on more staff . Around 66,600 women and men were employed in the sector at the end of 2023 , 2.4 per cent more than at the end of 2022 ,” continued the VDW .
Challenges in focus
The VDW believes that challenges , such as bureaucracy , have disproportionately impacted SMEs . Bernhard cited the ‘ Supply Chain Duty of Care Act ’ and the European Union ’ s ‘ Corporate Sustainable Reporting Directive ( CSRD )’ as examples .
“ They are an additional burden on business and pose a disproportionate challenge to small and medium-sized companies in already difficult times . They fail to achieve their goals and the resulting costs are far too high ,” was his verdict .
Both laws include extensive documentation and reporting obligations regarding compliance with fair working conditions and environmental protection requirements in the supply chain .
“ Even if it were possible to create transparent supply chains , SMEs lack the power within the market to enforce the required standards in suppliers outside their own legal sphere of influence ,” Bernhard added .
The lengthy licensing requirements for dual-use exports represent a further source of irritation , according to Bernhard .
“ Some companies have a not inconsiderable proportion of their turnover waiting for approval by the authorities ,” said Bernhard . His proposal to the government : “ Hardly any applications are actually rejected so it ’ s not about questioning the procedures , simply about shortening the processing times . It would also make sense to look into the committees meeting more frequently for a temporary period to ease the bottleneck .”
New initiatives
( L-R ) Bernhard Geis , Head of Economics and Statistics , VDW ; Franz-Xaver Bernhard , Chairman , VDW , and Dr . Markus Heering , Executive Director , VDW ( Photo : VDW ).
The mechanical engineering sector is breaking new ground in the fight against skills shortages . The Youth Education and Development Foundation for Mechanical Engineering in Germany is aiming to attract additional target groups into “ dual ” training with its young talent campaign . The aim is to
16 | ismr . net | ISMR March 2024