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Corona Crisis Positive Prospects for Mechanical Engineering Industry?

| Editor: Nicole Kareta

The vast majority of mechanical engineering companies are confident that they will return to the nominal sales level of 2019 in the medium term. However, the order situation remains tense for the time being.

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While the vast majority of mechanical engineering companies is confident that in the medium term they will return to the nominal sales level of 2019, the order situation in this sector remains very tight.
While the vast majority of mechanical engineering companies is confident that in the medium term they will return to the nominal sales level of 2019, the order situation in this sector remains very tight.
(Source: gemeinfrei / Pixabay )

The vast majority of mechanical engineering companies is confident that in the medium term they will return to the nominal sales level of 2019. This is the key message of the latest VDMA flash survey on the corona pandemic, in which 658 member companies took part. "80% of our members expect to achieve nominal 2019 sales levels again by 2022 at the latest. About 40% of the companies with annual sales of less than 250 million euros expect this step to be achieved as early as 2021. The larger companies are somewhat more sceptical in this respect, with only 22% of companies with annual sales of 500 million euros or more showing this confidence," says VDMA Chief Economist Dr. Ralph Wiechers.

"But there is a number of other hurdles to overcome on the way to this goal besides the corona pandemic," adds Wiechers. Around 70% of the decision-makers surveyed see growing price competition as a particularly great challenge for the future. More than half of the respondents rate higher foreign trade barriers and increasing market fragmentation as a persistent problem.

Order Situation Remains Tense

Meanwhile, the order situation in the mechanical engineering sector remains very tight. "40% of the companies report noticeable or serious order losses or cancellations," says Wiechers. Companies also remain pessimistic about the outlook on the demand side for the next three months. As in the previous survey at the end of May, only a good 20% of those surveyed expect an easing of the situation on the demand side.

Over 80% of the companies are carrying out extensive capacity adjustments. About two thirds of the companies are using short-time work. "Short-time work has already proven its worth as an instrument of job security during the financial crisis. Consequently, it is no wonder that many companies are using short-time work during the corona crisis," explains VDMA Chief Economist Wiechers.

However, the positive developments in supply chains and "other disruptions" are encouraging. "In almost all areas, the respondents report fewer impairments, from logistics/transport processing and delayed acceptance by customers to travel and accommodation restrictions. In the course of the opening of the borders, a further relaxation is to be expected", concludes Wiechers.

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