Trade wars hurt German machine tool makers

Production by Germany’s precision tool manufacturers fell by an average of -7% in 2019, according to preliminary figures from the nation’s mechanical engineering association VDMA. The German mechanical engineering sector, one of the biggest in the world and a mainstay of German industry, continues to underperform, affected by trade conflicts, Kallanish notes.

Initial signals from the automotive industry hinted that production could recover in the course of the year and stabilise the demand for tools. Companies in this segment however are preparing for a further drop in 2020, the VDMA says. The sector’s production value in 2019 was around €10.4 billion ($11.5 billion), according to initial calculations presented by Stefan Zecha, chairman of the Precision Tooling Association within VDMA.

Trade conflicts and the resulting economic slowdown did not leave the precision tool industry unaffected in 2019. With a drop in sales of around -4%, the manufacturers of cutting tools were the least affected by this development. Dies and moulds lost -8%, and sales of clamping devices fell by -9%. The declines would have been greater if not for the phenomenon that precision tools are particularly in demand in difficult economic times, since they provide productivity gains without major investment, Zecha explains.

The German and Chinese markets in particular had developed significantly slower than expected. Business in the USA also remained below the previous year’s level in total, even though sales of cutting tools and clamping tools improved slightly.