Insights into the German machine tool industry and its markets

AMB 2022
Insights into the German machine tool industry and its markets

14.08.2022

Source: Messe Stuttgart

Marketplaces like AMB 2022 always act as a barometer of industry sentiment and that’s because technical details and business topics, such as failing supply chains and delivery times, will be discussed during the event in Stuttgart from September 13 to 17, 2022.

Shortage of chips, scarcity of materials, unstable energy supply – these are the challenges facing all manufacturing sectors today. Nevertheless, current figures show that virtually all sectors of industry are keen to invest in new metalworking machinery and equipment. Despite declining incoming orders from the German machine tool market in 2020, an astonishing 40% growth was recorded between January and May this year. As a result, levels are almost back to the record high reached in 2018.

The booming electronics sector, the reinvigorated aerospace industry, the trend towards e-mobility, investments in the environment and energy sectors and the sharp increase in state military budgets following the Russian war in Ukraine all contributed to these orders. In addition, VDW market experts expect the demand for production technology in the automotive industry and the supply of components to increase again in the coming year, as the situation shortage of chips is gradually improving. The next opportunity to measure sentiment will be offered to attendees at AMB 2022, which will be held September 13-17, 2022 in Stuttgart.

However, the bad news is that delays in delivery times are expected to continue over the coming year due to delivery bottlenecks. It will also impact many components used in and around machine tools. According to the German Federal Statistical Office, the machine tool industry has an order book of around twelve months. As a result, production will experience only limited growth this year: a 7% increase is expected for the summer. If interactions in supply chains gradually become smoother again, the industry should see a year of strong growth in 2023.

(Source: Landesmesse Stuttgart)

Feeling the effects of war in Ukraine and China’s lockdown

In June, the situation was considered “good” by the majority of German companies in the capital goods industry surveyed for the ifo business climate index, although expectations for the next six months continue to be overall negative. It is clear that the consequences of the war in Ukraine and the lockdown in China are still being felt.

Since the beginning of the Russian war of aggression against Ukraine, Oxford Economics – an English economic research institute – has predicted a decline in the world economy. Market watchers now expect 2022 global gross domestic product to rise 3.1% and industrial production to rise 3.4% amid continued strain on supply and price chains high materials and energy; figures lower than expected in the spring of this year.

The economic indicators—Purchasing Managers Index and Business Climate Indicator—also show signs of an immediate slowdown. The global Purchasing Managers Index (PMI) fell to a 22-month low in June. However, it is still above the 50 mark which, when exceeded, indicates growth. There were positive signs from China, where the index exited the recession zone after five months, climbing to 51.7 points. Markets such as Japan, South Korea and India also remained in the growth zone despite a slowdown in momentum. The Eurozone PMI also fell to a 22-month low. Germany lost almost three points, reaching the European average of 52 points. The index also fell in the United States. The industry performed particularly well in the Netherlands (55.1) and Switzerland (59.1). On the other hand, the situation was tense in Poland (44.4) and Turkey (48.1).

The much talked about gas supply disruption also shows that we live in times of uncertainty and therefore the risks are very high. It is very difficult to calculate the effects that a shortage of natural gas can have on the industrial supply chain; however, upheaval is inevitable and the aftershock of it will certainly impact the demand for machine tools as well. For this reason, the VDW recommends that companies exercise commercial caution and prepare for a possible significant downturn.

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