Spanish Machine Tool Sector Turnover Up 9.7% in 2022; Exports and Incoming Orders Rising

San Sebastian, Spain – The Spanish advanced manufacturing and machine tool sector reached a turnover of € 1,723.83 million in 2022, which was 9.7 percent up on 2021. The year was marked by inflation, a rise in energy and raw material costs, and huge supply issues, which were further complicated by the war in Ukraine. The portfolio accumulated throughout 2021 and the strong start to 2022 enabled the sector to largely overcome these setbacks. The two main subsectors, metal cutting and metal forming, had similar growth after several years of successive drops in metal forming activity due to stoppages in automobile sector projects. With automobile manufacturer activity recovering and increased demand from the energy, aeronautics, capital goods, and metal-mechanical sectors overall, both subsectors felt a boost.

Exports also increased significantly, by almost 10 percent, reaching a record high of €1,364.6 million. Also in exports, growth in metal cutting and metal forming was almost identical. The main destinations of export sales were: Italy, Germany, USA, France, and China, followed by Mexico, Portugal, and Turkey. The spectacular sales figure achieved in Italy is of note, the highest recorded, thanks to the incentive schemes put in place by the Italian government to promote manufacturing investment.

According to José Pérez Berdud, President, AFM Cluster, a group of six industrial associations that represent the interests of advanced and digital manufacturing in Spain: “2022 was a truly complex year. Although the year began with a good workload, the cost structuring of the orders we had under way was affected by the price increases we had been suffering for a number of months. In addition, Russia’s invasion of Ukraine rocked the foundations of global trust. Not only was the world being faced with human tragedy but it was also dealing with another extraordinary increase in costs, cancellations of activity with Russia and its allies, and huge uncertainty regarding the economic and industrial outlook. However, after the initial doubts, against all prognosis, the year continued steadily on, and month by month, industrial activity in several sectors and demand for manufacturing technologies held strong. The year ended with good activity figures, even outperforming our forecasts in terms of incoming orders, which guarantees an interesting start for 2023.”

Incoming orders

Orders were up by 11.28 percent in 2022, with a clear recovery in incoming metal forming orders, and metal cutting looked good too. It is the second-best accumulated incoming orders figure ever, excluding inflation. Orders coming in from abroad are also performing well, with an increase of 13.25 percent. China, Germany, USA, Mexico, and Italy’s demand is notable. Domestic orders are down slightly (-3.3 percent), practically maintaining the prior year’s figure.

In terms of client sectors, there has been a notable recovery in investments in the automobile sector, which represents significant use of Spanish metal-forming subsector manufacturers. Aeronautics has also resumed the manufacturing programmes that had been put on hold during the pandemic. In addition to these, the energy sector, the metal-mechanical sector in general, and the capital goods sector are all showing positive outlooks.

Domestic consumption is up by 31.7 percent due to the effect of imports, although the original figures were very modest and less than desirable for a country that needs to be better equipped and have more industry.

Forecast for 2023

Forecasts for the end of this year are reasonably optimistic, taking into account the interesting order portfolios in the hands of the sector companies. Turnover at year’s end will likely increase by approximately 5 percent.

Although some of the standard forecasts indicate a slight deceleration, it seems this may be temporary and is likely to be easily overcome. Profitability will be key in the coming months if these forecasts are met. The big battle for the Spanish sector will be to manufacture the orders it has under way in a timely and efficient manner at a time when this is really complicated.

Xabier Ortueta, CEO, AFM Cluster, explains: “Due to cooling down and inflation control measures, we are expecting the economy to slow down in 2023, which will most likely lead to a drop in incoming orders. Either way, although we have learnt that these are not good times for making projections, our forecasts point towards a shorter and less dramatic fall. Although we remain cautious, we are moderately optimistic and trust that our current portfolios and our positioning in strategic sectors such as energy, aerospace, capital goods, or the automobile sector will see us through the year well. On the other hand, the need to secure supply chains and ‘friendshoring’ point towards new and interesting investments in equipment which we should take advantage of in order to continue growing”.

Strategic axes: people, digitalization, and sustainability

The future of advanced manufacturing will require the Spanish advanced manufacturing and machine tool sector to successfully tackle three major challenges: attracting and retaining more qualified people; promoting profitable and industry-efficient digitalization; and delving into the implementation of increasingly environmentally-friendly processes that will reduce its carbon footprint and that of its clients and suppliers. These are the strategic projects that the association promotes with its associated companies to guarantee the sector’s competitiveness and sustainability.

In this regard, Berdud adds: “In addition to our usual challenges in terms of management, innovation, and internationalization, in recent years these have been joined by three cross-cutting drivers for all of industry, which are particularly impactful for us. First of all, talent is the main factor in a highly technical, complex, and competitive sector. We need to be really active in showcasing and demonstrating the interesting array of careers that our sector offers. We need to be appealing to young people, we need to keep taking care of our staff, and we need to hire decidedly more women in workshops. Moreover, digitalization, both of our products and our processes, should clearly contribute to bringing profitability to our clients with simple implementations and quick turnarounds. We are talking about democratizing digitalization, and for this, we need industry to understand how important it is to have the data that makes it possible. Lastly, as a sector that is a driver of sustainable energy solutions, we must build messages and strategies that enable us to bring significant carbon footprint reductions to our clients.”

Image Source: AFM Cluster