VDW German Q1 machine tool orders fall 7%, annual production seen up 5%

Incoming orders for German machine tools dropped 7% in the first quarter of the year, the German machine tool association VDW said, but production this year is expected to rise 5% despite the weak quarter.

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“The German machine tool industry remains on a solid path,” VDW Managing Director Wilfried Schäfer said. “An increase in production in 2012 is all but secured due to the backlog in orders.”

The association played down the first quarter decline, saying it was “moderate” and pointing to ongoing production strength. “German industry continues to operate at full capacity and is investing to increase output so it can fill orders,” Schäfer said.

The declines have been priced in, Schäfer noted, and they offer breathing room for companies to turn their focus on strategic themes. He pointed to business expansion in Asia as an example.

Foreign orders fell 9% and domestic orders were down 1%, the association reported.

The domestic appetite for forming technology reportedly stabilised overall demand. Large purchases in the first quarter helped boost orders more than 20% in the sector.

Overall, purchasing varied by region. “European demand has been quite fair,” Schäfer said. While the debt crisis has hurt demand from southern Europe, other areas like Scandinavia, the UK and France continue to display a strong hunger for equipment.

The VDW reported that order backlogs in February were nine months, a level similar to October of last year. Capacity utilisation was also little changed in April at 95.1%. Employment rose 6.4% from February of last year.

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