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German machine tool industry feels the pressure

Posted on 03 Jun 2020 and read 449 times
German machine tool industry feels the pressureOrders received by the German machine tool industry in the first quarter of 2020 were 25% down on the same period last year. Orders from within Germany fell by 22%, while 27% fewer orders were received from abroad.

Dr Wilfried Schäfer, executive director of the VDW (German Machine Tool Builders' Association), Frankfurt am Main, said: “Global demand for machine tools fell sharply last year due to various challenging factors, but it fell still further at the beginning of the current year. Only a proportion of the corona effect is currently visible in the books and it will take a few months before the full effect becomes apparent.”

In the metal cutting sector, which serves a broad customer base, the decline in orders is more than double that of the more project-driven metal forming sector and domestic business in Germany which offers a small ray of hope. It rose by a surprising 4% in March, mainly due to project business in the press-making segment.

The only region in which orders were up in the first quarter was America, especially Mexico and this was due to automotive projects. Six of the top 15 markets posted increased order levels — the USA, Mexico, Russia, Japan, Canada and the Netherlands.

Mr Schäfer continued: "Russia was once the third largest market for our industry. Economic sanctions, however, have resulted in a sharp decline in businessm but it is all the more gratifying to see a revival from Russia in the current crisis."

Sales revenue also fell – by 18% – in the first quarter. Mr Schäfer concluded: “This is exactly in line with the 2020 forecast we issued in February of this year. However, it is already apparent that the order figures do not reflect the full extent of the decline, which will eventually be even more severe. Capacity utilisation in the industry also fell significantly by 18 points to 64% between January and April.

“We currently expect the situation to improve in the second half of the year, provided there is further scaling back of the lock-down arrangements and that production returns to normal. This will determine where the industry will be at the end of the year.”