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Strong growth in German machine tool industry orders

Posted on 27 Aug 2021 and read 1557 times
Strong growth in German machine tool industry ordersOrders received by the German machine tool industry in the second quarter of 2021 were 103% up on the previous year according to the latest figures released by VDW (Geman Machine Tool Builders Association). Orders from Germany rose by 81% while export fared even better — 114% higher than the previous year.

In the first half of 2021, the level of orders received by German providers rose by 57% — domestic orders increased by 38% on 2020, while export orders were up 68%.

Dr Wilfried Schäfer, VDW executive director, said: “The industry has turned itself around with considerably more dynamism than was originally assumed and, despite some delivery difficulties, is posting strong increases in order levels.”

The very high growth rates were explained in part by the weak reference values from 2020 as a consequence of Covid-19. However, the order volumes have recovered noticeably and, at 4%, are now only slightly below the pre-Covid-19 levels seen in 2019. The development is also broad-based, which bears witness to the pent-up demand among manufacturers worldwide.

Demand for German machine tools is still being driven by export markets. Asia continues to be dominated by high demand from China, which accounts for two-thirds of Asian order volumes.

Meanwhile business with the USA is starting to recover with increasing signs that US orders are about to pick up more strongly. Europe has also revived noticeably. Here, Government fiscal policy measures including investment programmes, have boosted demand — with Austria and Italy in particular leading the way. The German market is set to follow suit, albeit with a delay. Overall, however, the peak levels of 2017/2018 are not expected to be matched until the next quarter.

Mr Schäfer said: “The picture would be even rosier without the bottlenecks and price increases in supplies of electronics, steel and sheet metal etc.”

Further increases in demand are expected

As long as the global economy continues its recovery from the pandemic, further increases in demand are expected and this is already feeding through to production level increases this year which has led Oxford Economics, the VDW’s forecasting partner, to revise production growth to 8%, two points higher than in the spring.

This would bring the volume for the current year to 13.2 billion euros. Mr Schäfer said: “Nevertheless, there is still some way to go before we reach 2018/2019 levels.” At that time, the industry reached 17 billion euros.

Employment represents a delayed indicator of economic development, and is still falling in Germany. In June, the sector employed round 64,200 men and women, almost 8% fewer people than in 2020 — mainly due to the fact that most furlough schemes had ended in the country.

Mr Schäfer concluded: “Nevertheless, we are also worried about the shortage of skilled workers, which our industry will need to meet the major challenges which lie ahead. Key factors here include the transformation of the automotive industry, the energy transition and digitalisation. You need the right people to get these done.”