German Machine Tool Industry Faces Decline in Production Amid Economic Headwinds

In 2024, the German machine tool industry anticipates a nearly 3 percent drop in production, totaling EUR 14.8 billion in nominal terms, reports Franz-Xaver Bernhard, Chairman of the VDW (German Machine Tool Builders’ Association). Despite reaching a nominal record of EUR 17 billion in 2018/2019, this figure remains unmatched.

Orders have notably slowed since the start of last year, impacting sales and production. While a substantial order backlog initially supported production, supply bottlenecks have been mostly resolved, hastening backlog processing. Consequently, existing orders struggle to compensate for the lack of new ones, with orders falling by 10 percent in nominal terms in 2023, especially in domestic demand.

The global economy offers little relief in 2024, with reduced GDP and investment growth rates and a weak international purchasing managers’ index across key markets. Bernhard notes divergent trends, with growth sectors like electric vehicles and medical technology boosting project business, while standard machine business remains sluggish. Small and medium-sized enterprises, hesitant about investing, face challenges amid higher interest rates, favoring companies that embraced early transformation efforts.

Despite challenges, 2023 concluded positively, with estimated production increasing by nearly 8 percent in nominal terms to EUR 15.2 billion. Exports surged by 9 percent, led by double-digit growth in America, while domestic sales saw a 5 percent rise. However, bureaucratic regulations like the Supply Chain Duty of Care Act and the EU’s Corporate Sustainable Reporting Directive (CSRD) pose additional burdens, particularly for small and medium-sized enterprises, amid challenging times.

Original source Metalworking News