"These dips are due not least to the extremely buoyant first half of 2018," said Dr Wilfried Schäfer, executive director of the VDW, the German machine tool builders' association, commenting on the result. This base effect is expected to decrease significantly in the second half of 2019.
"Nevertheless, the cooling of the global economy is now finally impacting on the German machine tool industry,” he continued. “Domestic business, long a counterweight to the decline in foreign orders, has lost a great deal of momentum. The only bright spot is the Eurozone, which is now much more stable and saw only a 3% downturn. However, it can only stabilise the loss from the non-Eurozone to a marginal extent.”
The causes of the downturn are easily identified: politically motivated disruptions to world trade which affect the emerging markets, weak growth in China, structural weaknesses in the automotive industry (the largest client market), and the slump in the semiconductor industry.
"In 2018, the international automotive industry halved its capital spending to less than 4% compared with the previous year, and it is likely to plan an even lower figure for 2019," Mr Schäfer explained.
Machine tool order levels are below those of sales for the first time since mid-2014. Sales increased by 6% in the first three months of 2019.
"Many companies are currently relying on their order backlog from the previous boom," Mr Schäfer affirmed. “The excessive delivery times are shortening – which makes procurement more flexible for customers and reduces plant production throughput times for manufacturers. Capacity utilisation In April of this year was at 86.5% and thus below last year's average.
"The VDW nevertheless expects production to grow by 1% in 2019," Mr Schäfer emphasised. “We are expecting demand to pick up in the second half of the year. The order backlog should also provide sustenance for some time to come.”
VDW www.vdw.de
