Decline in German Machine Tool Industry

Frankfurt, Germany – The first quarter of 2020 saw a 25 per cent decline in orders, in comparison to the same period last year received by the German machine tool industry. Orders from within Germany fell by 22 per cent and 27 per cent fewer orders from overseas.

Commenting on the results, Dr. Wilfried Schäfer, Executive Director, VDW (German Machine Tool Builders' Association), said, "Global demand for machine tools fell sharply last year due to various challenging factors, but it fell still further at the beginning of the current year." He added further, “Only a proportion of the corona effect is currently visible in the books and it will take a few months before the full effect becomes apparent.”

Image Source: VDW (German Machine Tool Builders' Association)

Broad customer-based metal cutting sector witnessed the decline in orders is more than double that of the more project-driven metal forming sector. A surprising rise of 4 per cent in March, offers a little ray of hope for domestic business in Germany, primarily due to project business in the press-making segment.

The only region in which orders were up in the first quarter was Mexico and America, due to automotive projects. Six of the top 15 markets posted increased order levels, especially the USA, Mexico, Russia, Japan, Canada, and the Netherlands. "Russia was once the third-largest market for our industry. Economic sanctions, however, have resulted in a sharp decline in business. It is more gratifying to see a revival from Russia in the current crisis," reported Schäfer.

In the first quarter sales revenue also fell by 18 per cent. "This is exactly in line with the 2020 forecast we issued in February of this year," Schäfer continued. "However, it is already apparent that the order figures do not reflect the full extent of the decline, which will eventually be even more severe. Capacity utilisation in the industry also fell significantly by 18 points to 64 per cent between January and April. We currently expect the situation to improve in the second half of the year, provided there is further scaling back of the lock-down arrangements and that production returns to normal. This will determine where the industry will be at the end of the year," he concluded.