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VDW German Machine Tool Manufacturers Register 20 % Drop in Order Intake

Editor: Alexander Stark

German machine tool builders are facing tougher times: In the first quarter of 2019, order intake fell by 21 % year-on-year.

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Demand for German machine tools has declined, especially outside the euro zone.
Demand for German machine tools has declined, especially outside the euro zone.
(Source: Index-Werke)

Domestic orders declined by 10 %. Foreign orders dropped by 27 %, the German Machine Tool Builders’ Association (VDW) reported in Frankfurt am Main. “These declines are not least attributable to an extremely strong first half of 2018," comments VDW Managing Director Dr. Wilfried Schäfer. The base effect will decrease significantly in the second half of 2019, Schäfer said.

Economic Slowdown Starts Affecting the Machine Tool Industry

“Nevertheless, the slowdown of the global economy has now reached the German machine tool industry as well," Schäfer continues. Domestic business, which has long been a counterweight to the decline in foreign orders, is loosing momentum. The only ray of hope is the euro zone, which is much more stable and only dropped by 3 %. However, it can only marginally stabilize the loss from the non-euro areas.

The VDW sees the reasons for the declining trend in politically caused disruptions in world trade, which are having an impact on the emerging markets. Further reasons are the weak growth in China, structural weaknesses of the automotive industry as the largest customer of this sector, and the slump in the semiconductor industry. “The international automotive industry had already halved its capital expenditure in 2018 to less than 4 % compared to the previous year and is likely to remain below this level in 2019," explains the VDW Managing Director.

Order Intake in Machine Tool Building Remains Below Sales Level

For the first time since mid-2014, orders for machine tools are below sales again. In the first three months of 2019, turnover still increased by 6 %. “Many companies are currently relying on the order backlog from the previous boom," says Schäfer. Long delivery times are becoming shorter again. As a result, procurement from customers and throughput times in plant production at suppliers become more flexible again. In April of this year, capacity utilization was 86.5 % and remained below last year's average.

"The VDW nevertheless expects production to grow by 1 % in 2019," confirms the VDW Managing Director. On the other hand, he expects demand to pick up during the second half of the year. The order backlog is also expected to make itslef felt for some time to come.

This article was first published by MaschinenMarkt.

Original by Stéphane Itasse / Translation by Alexander Stark

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