German mechanical engineering regains optimism

After a disappointing 2020 so far, the majority of Germany’s mechanical engineering companies are confident they will achieve a nominal sales increase again in 2021, according to their industry federation, VDMA.

This is the key message of a flash survey carried out by VDMA of 640 member companies on the economic effects of the coronavirus pandemic. Of the respondents, 60% expressed optimism for 2021. 

However, “…this optimism is expectation-driven and therefore very fragile,” Kallanish hears from VDMA chief economist Ralph Wiechers. It should be kept in mind that more than half of the companies are expecting turnover losses of 10-30% in 2020, he adds. The growth base in the following year is therefore correspondingly low, he notes.

There has been little signal until now of the situation normalising. “45% of the companies report a noticeable drop in orders, some 34% saw profound drops; this confirms the gloomy picture of recent weeks,” says Wiechers. Companies’ customers from the automotive industry are particularly hard hit.

More companies nevertheless see a silver lining on the horizon. One quarter expect a recovery in demand in the next three months, whereas 16% expect the situation to worsen. The situation along the supply chain has also continued to ease. By now, only slightly over 10% of companies say they are still affected by disruptions in the supply chain.