Italian mechanical engineering industry Italy: Mechanical Engineers ensure their Revival

Von Stéphane Itasse

Italian economy was stuck in recession since 2011; however, the signs for a reversal of trend increased in the meantime. Machine tool industry, robotics and automation have already managed und have an optimistic approach for 2015.

Italian mechanical engineering companies have managed the reversal of trend at the end of 2013; in 2015, the situation should improve further.
Italian mechanical engineering companies have managed the reversal of trend at the end of 2013; in 2015, the situation should improve further.
(Photo: Kuhn)

With negative GDP of 0.4 %, the Italian economy continued to sink in 2014; however, the decline was less than in the previous years – in 2012, it was 2.8 %; in the year 2013, it was 1.7 %. For the first quater of 2015, the Statistical authorities of Istat (Istituto Nazionale di Statistica) reported a plus of 0.3 %; for the second quarter, 0.7 % as compared to the previous year. In absolute numbers, the GDP dropped in 2014 below the level of the year 2000 according to the reports; with respect to GDP per capita even below the status of 1997.

Early indicators show an economic recovery in Italy

According to Istat, it was an international demand, which prevented a severe recession in the previous years. For this purpose, the domestic demand again declined in 2014. The companies primarily restricted the investments and reduced their warehouse stocks.

However, the statistical authorities sound optimistic for the current year. On one hand, the external factors such as debasement of Euro, the decreasing oil prices and the financial policy of European Central Bank reflected in the budget. However, also in Italy, the indicators would point upwards: Thus, the corrected industrial production in July (recent data) is increased by 2.7 % as against the previous year. The consumer confidence has significantly increased in August from 106.7 to 109 points. In the second quarter, the imports would have significantly grown with 2.2 % than the exports (+ 1.2 %). For the complete year 2015, OECD of 0.6 % economic growth is assumed in Italy; it should be 1.3 % in 2016. The Rome government is somewhat more optimistic and expects 0.9 % for the current year and 1.4 % for the upcoming year.

The increase of 30 % as compared to the previous year in incoming orders was reported for machine tools, robotics and automation in the second quarter according to the association Ucimu – Sistemi per Produrre. Thus, the sector confirmed its reversal of trend at the end of 2013 and recorded the seventh subsequent quarter with increasing incoming orders. However, the seven quarters were preceded by seven crisis years.

Demand for machine tools and automation sharply increased in Italy

Thus, the domestic orders increased in the second quarter of 2015 by 46.7 % as compared to the prior-year quarter. The orders from foreign country increased by 26.1 %. The index of the association for incoming orders achieved a status of 126.5 points (Basis 2010 = 100). "Italian manufacturers are on path of recovery in 2015", commented Ucimu-president Luigi Galdabini regarding the development. In his opinion, their export remained true; however, they would have gained from the renewed demand for production systems in Italy.

"The results of the recent survey are certainly positive. We experience a recovery in Italian market, which has been certainly supported by the new Sabatini-law", said Galdabini further. Rome had enacted this law in 2013 due to the liquidity bottleneck in Italian industry, in order to boost the investments in machinery and equipment. The country provided loans with subsidised interest rates from 2014 up to 2021 primarily for small and medium-sized companies (KMU). The loans are restricted to the purchase and leasing of machinery, equipment and their installation for productive purposes. The amount is restricted to 2 million Euro per company and for a period of five years.

In between April 2014 and June 2015, the companies have utilized the loan to the extent of over 2 billion Euros by law. Thus, 58 % of the subsidies were still available for the upcoming year at this point of time.

Ucimu-president expects an additional impetus from the trade fair EMO Milano 2015: Over 1300 companies from all over the world will present their offer for metal processing in Milan from 5th up to 10th October. The maximum number of companies – over 400 – come from Italy according to the trade fair organizor Ucimu; both the next largest exhibitor countries are Germany and Taiwan. However, Galdabini demands further support from the country in the form of an incentive program for the voluntary replacement of machinery in Italy, in order to "support the demand and to maintain economic competitiveness of Italian production industries".

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