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24 February 2010 VDW Sees Demand Driving 2010 German Industry Recovery
Germany’s machine tool industry is gaining renewed confidence. “Though the ongoing year is once again going to be a very difficult one, we nonetheless expect a significant upturn in business during the first half of the year,” explained Martin Kapp, chairman of the VDW (the German Machine Tool Builders’ Association). Speaking at the organization’s annual press conference, Kapp supported his assessment by pointing out that orders have improved month by month since September. The order level has risen by more than 60% since its nadir in July/August. There will be a time lag before this shows up in sales. Therefore, this trend will not suffice to stimulate growth in production output. The VDW expects German machine tool production to fall by 10% in 2010. It believes that German manufacturers can profit in 2011 from an increase then in international investment. The recovery in demand is being driven by export orders and project business. Newly industrializing China and India have recovered rapidly from the global financial and economic crisis, and other important markets such as the USA, Russia and Brazil are getting back on track for growth. In structural terms, more and more orders are coming from project business. Last year went better for the German machine tool industry than once feared, said Kapp, though the sector did suffer an unprecedented slump. The fall in machine tool production output turned out to be 30% rather than the 40% anticipated at midyear. Still, all of the key statistics went deep into minus territory in 2009, including order bookings, domestic orders and exports. Only deliveries to East and Southeast Asia increased. Workforce downsizing in 2009 was limited to only about 10% from the employment high point in the autumn of 2008. “The more flexible labour market and short-time-working arrangements have helped firms to keep on staff for so long,” explains Kapp. Many companies are determined to hang onto their permanent staff even under less-than-easy conditions, but, predicts a regretful Kapp, not all will succeed. Capacity utilization in the machine tool industry was 67.6% in January. The order backlog was still at 5.6 months as recently as October 2009. Both of these figures relate to the substantially reduced level of production output in the German industry. Germany’s machine tool industry is coming through the crisis in much better shape than was the case in earlier downturns. This is apparent not least in the fact that Germany has overtaken its principal competitor, Japan. Japanese machine tool manufacturers’ production output fell twice as steeply as that of their German counterparts. German manufacturers have slightly increased their share of the global market, noted Kapp, and now lead Japan by approximately 7% in the rankings. For further information: VDW Verein Deutscher Werkzeugmaschinenfabriken
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