Pic: Bernhard Geis, head of economics and statistics at VDWFollowing three difficult years, the machine tool industry can breathe a first sigh of relief, according to the VDW (German Machine Tool Builders’ Association). Incoming orders increased by 15% in the first quarter of 2026. Nevertheless, the situation remains challenging – production, exports and employment continue to fall, while the conflict in the Middle East is leading to greater uncertainty and higher costs, and dampening any spirits to invest.
Bernhard Geis, head of economics and statistics at
VDW (German Machine Tool Builders’ Association) said: “The situation appears to have bottomed out, however, we are nowhere near to reversing the trend. The coming months will show whether the recovery is more permanent.”
Foreign and domestic orders are almost equally contributing to the uptick in orders, with 14% and 18% respectively. And yet these figures don’t really reflect the full picture. The baseline for these calculations is weak, particularly at home. Furthermore, ad-hoc orders and project business are playing a key role, however without any discernible recovery of demand.
The service and retrofit businesses continue to have a stabilising effect. At the same time, the dynamic varies widely depending on the sector: aviation, defence, medical technology, and electronics are showing positive development, while metal processing and mechanical engineering, as well as automotive and supplier industry in particular, remain weak.
The situation in the machine tool industry remains in the balance. Production dropped in the first quarter by 11% to 2.8 billion Euro. Domestic sales dropped 13%, performing worse than exports which fell by one tenth. Regionally, the situation is more diverse: the USA is driving growth (+8%), while Europe lags considerably behind (-11%). Exports to Asia have fallen by 18% – largely due to the collapse of exports to China (-32&). In light of the very competitive pricing, “Local for Local” is becoming a key mantra for German manufacturers who have their own on-site production. India is experiencing dynamic growth and has climbed the ranks to become the third largest market.
With a decline of 8%, imports in the first three months also reflected the weaknesses in the German market. They did, however, perform slightly better than domestic sales. Japanese manufacturers, in particular, were even able to increase their sales in Germany. Overall, domestic consumption fell by 10% and confirmed the weakness of investment in Germany.
Corporate capacity utilisation continued to decline to the most recent figure of 73 percentage points. The necessary capacity adjustments can now be clearly seen from the changes in the numbers employed. In March, the industry was employing 60,600 people, almost 9% less than the previous year.
Mr Geis concluded: “The increase in orders in the first quarter is a key indicator, however it doesn’t give the all-clear. For a steady upward trend, there needs to be greater investment confidence – and more reliable economic conditions.”