German Machine Tool Industry Expects Increased Production Output in 2015

The German machine tool industry is anticipating a 3 % rise in production output during 2015. “The low oil price and the fall in the euro’s exchange rate are invigorating capital investment and thus also increasing the demand for machine tools,” says Martin Kapp, Chairman of the German Machine Tool Builders’ Association VDW, speaking at the organisation’s annual press conference in Frankfurt am Main.

VDW Chairman Kapp (Source: VDW)

VDW Chairman Kapp (Source: VDW)

Oxford Economics, the VDW’s forecasting partner, is predicting an improvement in the global business cycle during 2015. Firstly, this will benefit the major user sectors for machine tools. In Germany, the automotive industry and the mechanical engineering sector (which together buy about 70 per cent of machine tool production output) are each expecting growth in their own production volumes.
Secondly, pundits are forecasting a moderate global recovery in demand on a relatively broad base for 2015, driven primarily by America. Thanks to the ongoing process of re-industrialisation in the US, the market is set to expand beyond its traditional drivers: the automotive and aircraft construction industries. Capital investment by the automotive industry, moreover, is underlining the particular importance of the NAFTA region. The result is high double-figure growth rates for machine tool orders in Germany.
European demand was hit painfully last year by developments in Russia. Nonetheless, orders from some nations of Eastern Europe are already showing medium-double-figure rises. In Italy, government subsidies for capital investment in the shape of reduced-rate loans have proven beneficial. Good business with Switzerland is owed to close entrepreneurial interweaving between German manufacturers and their Swiss subsidiaries. In 2015, a moderate recovery in European demand is expected.
This also applies to Asia. Thanks not least to China and Korea, machine tool consumption stabilised last year. So recently there has been a concomitant rise again in orders placed with German manufacturers.
“We are cautiously optimistic about the ongoing year, since the German machine tool industry is in good shape, as a vendor of production equipment for the entire world,” is Kapp’s summary. The sector is fully aware, though, he added, that the numerous crises around the globe continue to entail manifold risks, and that it is still waiting for clearer growth signals in many important markets.
Last year, the German machine tool industry saw its production output fall for the first time in three years. With a minus of 1 %, production output came to 14.4b euros, the second-highest production figure that the sector has ever achieved.
Exports fell by three per cent to 8.9b. Inside the triad, deliveries to Europe came out best, with growth of 1 %. Both Asia and America performed less impressively. The export ratio, however, remained very high overall, at around 67 %. Imports suffered less severely, rising by four per cent. Almost 70 % of imports come from Europe; Switzerland remains the most important supplier.
German manufacturers, with a share of 17.7 per cent, also rank among the Top Three of the world’s biggest producers, behind China and Japan, the latter achieved substantial growth, thanks to a high rise in their own machine tool consumption. (Source: VDW)

Links: VDW

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