German Machine Tool Industry Faces Challenging Market Conditions: Orders Drop by 16% in Q3 2024

According to the latest figures from the German Machine Tool Builders’ Association (VDW), the German machine tool industry has experienced a notable decline in orders during the third quarter of 2024, with a 16% decrease compared to the same period last year. Domestic orders fell by 17%, while international orders dropped by 15%. This downward trend has continued throughout the year, with total orders for the first three quarters of 2024 showing a 23% decline compared to the same period in 2023. Specifically, domestic orders were 10% lower, and orders from abroad were 28% down.

Dr. Markus Heering, executive director of the VDW, acknowledged the ongoing challenges facing the sector. “The order situation remains difficult,” he said. “German industry performed relatively well in the first nine months of the year, supported by some significant individual projects. However, domestic customers are currently very unsettled, and investment levels remain low.”

This hesitancy to invest is having a ripple effect on the broader European market, with Germany serving as a key trading partner for many countries. As a result, other regions have also struggled, particularly Asia, where weak demand from China has led to a sharp decline. While the American market has posted a smaller decline, particularly in the USA and Mexico, it has not been enough to offset the losses in other regions.

Dr. Heering noted that the state of the industry has not changed significantly since the first half of the year. “The news from the automotive industry continues to be concerning, and overall business levels are down across both markets and customer industries. However, certain sectors, including aerospace, medical technology, energy, shipbuilding, and defense, are still benefiting from major projects,” he added.

At present, the new machine business has underperformed, with services, components, repairs, maintenance, and conversions outperforming in terms of demand. However, automation continues to be a key driver of investment in the machine tool sector, according to the VDW. The association’s surveys indicate that an increasing number of manufacturers are planning to reintroduce short-time working in the near future. In the second quarter of 2024, 35% of respondents considered this option, and this figure rose to 45% in the third quarter. Additionally, companies are planning to reduce their reliance on temporary workers, with the machine tool sector employing around 65,250 people at the end of the first half of the year.

Despite the challenges, the production forecast for the year remains unchanged, with a projected decline of 8% for the year as a whole. While the market conditions remain tough, the industry continues to seek ways to navigate the downturn and position itself for a future recovery, particularly with continued investments in automation and strategic major projects across key sectors.