German machine tool industry foresees 2021 rebound

After two difficult years, production in the German machine tool industry is expected to recover in 2021, with revenue to rebound by 6% year-on-year to €12.6 billion ($15.3 billion), Kallanish learns from federation VDW.

The automotive industry, in particular, the largest customer for machine tools, is benefiting from the upswing in China, VDW notes. Electronics, food processing, logistics and parts of the medical technology sector did good business during the crisis anyway. In Europe, too, investments are expected to rise again by 10% after a hard slump, chairman Heinz-Jürgen Prokop states.
In 2020, orders fell 30% due to the coronavirus crisis, following a decline of the same magnitude a year earlier. All other key figures also slipped deep into the red in 2020: production was down 31%, exports down 29% and domestic sales down 33%.

In 2019, capacity utilisation was still more than 88%, but fell to below 72% in 2020, comparable to the level of the financial crisis in 2009. The hoped-for upward movement for the current year is thus starting from a low level, Prokop cautions.

VDW notes that business against Asian competitors could become more difficult in the future. “Member companies are reporting great price and time pressure from Chinese clients,” Prokop says. In addition, intra-Asian trade is to become more permeable with the recently concluded RCEP agreement. This will intensify competition with Japan and South Korea in the Chinese market.

As the Chinese government is striving for greater independence from technology imports, many VDW members have established subsidiaries in China at an early stage.