Turnaround for German machine tool industry

Image caption: Dr. Wilfried Schäfer, Executive Director, VDW.

 

The German machine tool industry has registered positive quarterly results in orders for the first time since mid-2018. According to the VDW (German Machine Tool Builders' Association), orders received in the first quarter of 2021 were 26 per cent up on the same period last year. Orders from Germany rose by 10 per cent, it confirmed. Overseas orders, however, were 35 per cent higher than in the previous year.

 

"For several months now, the industry has been registering improving sentiment among customers. This is now finally being reflected in the figures," said Dr. Wilfried Schäfer, Executive Director, VDW.

 

However, the low level of figures in the first quarter of 2020 was also part of the reason for the strong growth, as demand fell away sharply from March 2020 because of the pandemic. Comparison with the first quarter of 2019 therefore provides a more realistic picture. Here, total orders are still 14 per- cent below the level at that time, while overseas orders are just one per cent higher.

 

"That means we still have a long way to go before we return to a reasonable level," Schäfer summed up.

 

“The upward trend in overseas orders in the current year is primarily attributable to the non-euro economies. China is driving the global economy forward and fuelling demand. It has been joined in this role by the new beacon of hope, the U.S. However, the recovery is relatively broad-based, as Europe is now also reviving. Many areas have a lot of catching up to do. The positive picture is completed by the capacity utilisation figure, which has risen from a low of 67 per cent last summer to its current rate of 79 per cent,” added the VDW.

 

Employment represents a delayed indicator of economic development and is falling at present. In February 2021, the sector employed around seven per cent fewer people overall than in the previous year. This translated into 66,800 men and women.

"This is a very moderate figure compared to the decline in production and orders. It shows how important it is for companies to retain their well-qualified staff. Short time working was a great help here," said Wilfried Schäfer.

 

Nevertheless, companies are struggling elsewhere. Bottlenecks in supplies are hampering production. In a recent pandemic survey, almost half of the machine tool manufacturers surveyed said they were experiencing serious problems with the supply of electronic components, especially controls. Around 46 per cent were experiencing difficulties with steel and metal products.

"Companies are already voicing fears of not being able to process orders on time because of the severe disruptions in the supply chain," Schäfer reported.

 

The VDW expects production levels to increase by six per cent in the current year. The resulting volume of 12.9 billion euros is above that of the 2009/2010 financial crisis, but still far below the record years of 2018 and 2019.