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Product category: Manufacturing industry news
News Release from: VDW
Edited by the Manufacturingtalk Editorial Team on 05 April 2002

German machine tool industry to
consolidate

Following a record production year in 2001, when sales rose by 10%, the German machine tool industry expects a fall of 10% back to year 2000 level.

German machine tool industry consolidates Following a record production year in 2001, when sales rose by 10%, the German machine tool industry expects a fall of 10% back to year 2000 level Already a year ago VDW reported that the German machine tool industry is in top shape and has achieved a higher production than ever before

At that time, it was hardly to be seen that our industry could once more surmount this result by two digits.

However, the production actually increased in 2001 by another 10%, to EUR10 billion.

This was the best result of all times until now.

With these dynamics, the German machine tool industry left all important international competitors far behind.

Having entered into the upswing later, it still is far above what the machine industry was able to achieve as a whole.

At the same time, Germany improved to become the biggest machine tool market of the world.

Although the advance over the previous titleholder USA is only extremely thin, it was possible for the first time to decline the presently pausing champion to second place.

Also in the competition for world market share, the Germans have caught up distinctly.

With a portion of 21%, we are following the chief competitor Japan, having 22%, closely on its heels.

German machine tool industry well positioned both nationally and internationally - at the end of the year, the industry employed 69,500 male and female persons.

This corresponds to a growth of approximately 2400 employees or 3.6% in the course of the year.

It still has medium-size structure, meaning that 70% of the enterprises employ less than 250 persons.

The now seven years of boom have been used by the machine tool industry to optimize its structures and to strengthen its international competitiveness.

With the build-up of production and/or distribution and service locations in key markets such as Western Europe, USA and Brazil, it has often followed its main customers from the automotive and supplier industry and thus is appearing in international presence.

Internally, efficiency was increased and production processes were made flexible, in order to be able to react to demand variations more efficiently.

Technologically, the performance of German machine tool manufacturers is excellent.

This refers to the changing product innovations of their customers for useful machine concepts, and also to application of latest methods and materials in the industry itself.

The best proof for their innovation leadership and creativity is that many production technologies of the big industry today can also be controlled by medium-size enterprises.

The past year profited to a high degree of the good order cushions from 2000.

We started with an order volume of almost 9 months.

This ensured capacity utilisation almost to the top until far into 2001.

Finally in December, almost 93% were still measured.

Bottlenecks came up additionally due to the lack of qualified personnel, but also due to the purchase of components and control systems.

The draught horse for the machine tool industry was exports absorbing more than half of the total production.

With an increase of estimated 9% to EUR 5.6 billion -- figures differentiated according to purchasing countries are at the moment available only from January to September -- it broke all earlier records.

The most important single market still are the United States.

For a long time, the German manufacturers were able to contrast positively from the US market decreasing as a whole, due to the fact that the US automotive industry honoured their technical competence.

Nevertheless, the USA are belonging with a minus of 9% from January to September to the declining markets among the 10 most important sales markets, besides Great Britain (-24%) and Austria (-11%).

However, the Nafta business in total remains on a growth rate.

Great importance as sales market is attributed to Western Europe that absorbs almost half of all machine tool exports.

Six Western European countries alone are included among the 10 most important markets.

Domestic sales grew slightly disproportionately by 11% to approx.

EUR 4.4 billion.

The main customer automotive industry realized a series of strategic projects.

The good capacity utilization in machine building also is giving strong impulses.

Imports rose by 11% to EUR 3.5 billion now.

This corresponds to an import quota of approx.

45%.

Based on the data situation, a ranking of the most significant import countries can at the present time only refer to the first half of the year.

Traditionally, Switzerland is the biggest foreign supplying country in the German market, with a share of about one quarter.

This place has successfully been expanded during the first half of 2001.

The Swiss have their domain in the spark eroding technology.

The following places have been held for many years in an unchanged sequence by Japan, Italy, France and the USA.

Japan has been able to expand its directly chargeable exports in 2000 only slightly.

However, Japanese companies often have production locations in Europe, the exports of which do not come up in the statistics of Japanese exports.

Germany for the first time the World's biggest machine tool market - parallel to the German machine tool industry, German machine tool consumption also developed magnificently.

With EUR 6.24 billion, the meanwhile highest domestic market volume has been reached.

Germany was even able to increase by 11%, while the consumption of the USA in second place diminished by approximately one fifth.

With EUR 6.17 billion, the USA are only slightly behind Germany.

However, the Americans are benefiting from an exchange bonus.

World-wide, the machine tool industry had to lose feathers in 2001.

As a total, the production volume decreased by more than 2% to approx.

EUR 39 billion.

This figure is understood with respect to the comparability of the national data without parts and accessories amounting to about 17% of the total production value.

In 2001, Germany has greatly maintained its position in the world standard and, with a production of EUR 8.7 billion, a growth of 10% and a world market share of 21%, is closely on the heels of chief competitor Japan.

The Japanese had to accept a decrease, but with a world market share of 22% they defended their top position.

With a production measured half as high as the top level, Italy ranged on rank 3 with a share of 12%.

The USA followed on rank 4 with a share of 9.5%.

Surprisingly good were the Chinese who already have reached 5th rank with EUR 2.4 billion.

The Chinese have succeeded in increasing the value of their own production by means of consequently demanded technology transfer.

This will also cause the own production to profit increasingly from this giant market.

In exports, Japan is with EUR 6.1 billion still far at the top, before Germany, Italy, the United States, and Taiwan.

Both the Europeans and the USA were able to expand their export business while the two Asian countries were losing feathers among the great exporting countries.

The machine tool imports of the Japanese give a traditionally modest impression with EUR 718 million and a decrease of 23%.

At the top of the importers are the USA and Germany.

On rank 3, just behind Germany, China already follows with machine tool imports of Euro 2.6 billion.

This is an increase of 27% and thus the greatest rise among the countries with a remarkable import volume of more than EUR 1 billion.

In 2002, calming down expected - seven years of boom coming to an end - in spite of high capacity utilisation, time pressure, long delivery periods, and increasing sales, it became visible at an early point that the steep flight was not going to continue.

Already during the first half of 2001, the orders received severely decreased and did not cover production any longer.

This particularly concerned our most important market, the USA, with its demand weakness exerting a reducing action on the Nafta countries and the South American key market of Brazil.

In Western Europe, the British proved to be weak in particular.

There, the finish of the procurement programmes of Rover came to negative effect.

The horrible terror attacks of September 11, 2001, additionally intensified the weakness of demand in almost all economic regions and therewith the uncertainty about the further development.

In the course of the declining foreign business, also the domestic investment readiness decreased noticeably within six months.

In total, the receipt of orders in 2001 dropped by 13%.

The order volume was EUR 9.4 billion by the end of the year, i.e EUR 4.8 billion from foreign countries and EUR 4.6 billion from within Germany.

However, various companies are differently affected by the decrease, with respect to whether a company is coupled to the strategic procurement process of the automotive industry or is serving a wider market.

Due to this, the individual economic situation of a company is gaining more and more importance.

For production we expect in 2002 a decrease of 10% to then again EUR 9 billion.

This would nevertheless allow to repeat the second best result of all times from 2000.

It will however be decisive whether the often stated expectation, that the total economy will accelerate again in the second half of 2002, may become reality.

Frankfurt, Germany, March 2002.

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