Machine Tool Industry Germany: Major projects boost mid-year figures to a healthy level

The German machine tool industry is in good shape. According to the German Machine Tool Buiders' Association, order bookings rose by 16% in Q2 2016 compared to Q2 2015, and employment remains at a high level.

Domestic machine tool orders were up by 19%, while demand from abroad increased by 14%, the German association announced today. The eurozone contributed growth of 37%, and non-eurozone nations a 10% rise in orders. Order bookings for the first half of the year increased by a substantial 12% compared to the same period last year, VDW said. While domestic orders rose by 10%, orders from abroad were also up (+13%).

“Our business is running significantly better than we expected at the beginning of the year. The sector can point to a sound, balanced performance over the year’s first half,” commented Dr Wilfried Schäfer, executive director of the sectoral organisation VDW (German Machine Tool Builders’ Association) in Frankfurt am Main.

The higher level of demand results primarily from good domestic business, and in particular from automotive projects in China and Mexico, he added. With regards to the first half of 2016, one-off effects are primarily responsible for the auspicious order situation. Abroad, machining centres and milling machines are benefiting particularly from large-scale orders.

All other metal-cutting technologies, plus significant areas of forming technology, however, are performing less well in terms of non-domestic orders from abroad. In Germany, by contrast, the picture is somewhat different, Schäfer said. “Metal cutting is 2% up, and the current as-is situation gives reason to hope that a broad spectrum of technologies can benefit from this.”

Turnover slightly up

Turnover in the first half of 2016 ended up slightly better than break-even. “In view of the encouraging development of orders in the year’s first six months, and the range of order backlogs, now recovered to over seven months, we are anticipating a perceptible rise in turnover for the upcoming period,” said Schäfer. This, he added, is conditional on demand levels remaining stable in the year’s second half as well, particularly on the domestic market. Germany’s industrial sector is in good shape, and exhibits impressive pricing structures and competitive efficacy.

The ifo Business Climate Index, for instance, contrary to analysts’ expectations, recovered again in July. “Despite Brexit, the business cycle is holding up well, and showing no significant signs of deterioration."

According to VDW, employment remains at a high level. This is an indication that the German machine tool manufacturers, despite cyclical fluctuations, are keeping themselves busy to face the challenges of the future. “The sector is entering the year’s second half in improved condition, and is continuing to invest in qualified staff,” emphasised Schäfer. In May 2016, almost 69,000 people were employed in the machine tool industry – a slight increase of around 1% over the preceding year.

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