The machine tool industry is breaking one record after another. The positive trend of the previous year continued in the first quarter of 2018. There are signs of solid growth in both order intake and production.
The sales markets in Germany and parts of Europe are currently in a boom phase. The German Council of Economic Experts – the so-called “Wirtschaftsweisen” or “the five sages of economy” – forecasts GDP growth of 2.2 % in Germany and 2.3 % for the euro zone in 2018. Industry associations such as the VDMA expect real production growth of 3 % for mechanical and plant engineering.
Machine tool market grows
The trend in the German machine tool industry is also heading clearly upwards. According to VDW (the German Machine Tool Builders Association, Verein Deutscher Werkzeugmaschinenfabriken), incoming orders in the first quarter of 2018 were 22 % higher than in the same period last year. Domestic orders increased by 39 %. International orders grew by 15 %. “Our industry will continue to be very dynamic in 2018,” says Dr Wilfried Schäfer, managing director of the industry association VDW in Frankfurt, commenting on the results. “This represents a seamless continuation of the outstanding development of the past year. Domestic orders remain the driving force. They are growing far more than twice as fast as foreign demand,” Schäfer continues. Machining and forming contributed equally to the growth in orders in the first quarter. Capacity utilisation was at 93.4 %.
In the first quarter of 2018, most machine tools were exported to China (21.7 %), generating total revenues of 509 million euros. The second-strongest customer country was the USA with a share of 13.1 % and 307 million euros. Italy is well behind in third place with a share of 5.7 % and 134 million euros. Compared to the previous year, however, this represents an increase of as much as 42 %. Only exports to Sweden achieved stronger growth with an increase of 61 % over the previous year from 26 million euros to 41 million euros. Exports to the Czech Republic (+ 41 %) and Romania (+40 %) also increased significantly in 2018.
Machine tools were imported mainly from Switzerland (31.1 %) and Japan (11.3 %). With a share of 6.8 %, Italy is also back in third place in terms of imports, although its importance as a supplier country declined significantly in the first quarter of 2018 compared with 2017 (-24 %). While 272 million euros went to Switzerland and 99 million euros to Japan, the figure for Italy was only 59 million euros.
The boom in almost all user industries worldwide had already driven production and order intake to a record high last year. With an increase of 7%, production exceeded the 16 billion euro mark in 2017. “Based on a high increase in orders last year, which will continue to bear fruit, we see potential for higher production growth in 2018 than expected in February and are raising our production forecast from 5 % to another 7 % growth,” explains Schäfer.
Production to continue to rise
According to VDW, Germany is one of the top suppliers of machine tools in the world. This had already been confirmed in 2017. According to estimates, German manufacturers ranked second among the most important producers, after China and ahead of Japan. “Here, however, class instead of mass applies,” Heinz-Jürgen Prokop, chairman of the VDW, puts into perspective the second place of German suppliers. China often produces “low tech” in large quantities for the domestic market and for developing countries. This is proven by the average price of a Chinese NC-controlled machine of 39,000 euros compared to 322,000 euros for a German NC machine. In exports, Germany remained world champions, being far ahead of Japan and Italy in 2017.
In certain occupations, such as mechatronics technician or IT specialist, and especially in rural areas, however, the skilled workers market is empty, states VDW. “According to our observations, the purely numerical shortage of specialists is driving automation forward,” reports Prokop. Many machine tool suppliers are increasingly thinking in terms of autonomous machines that carry out machining processes more independently of the availability of an operator.
Designers of a new kind
In reality, however, it is about the qualifications of the employees. The industry has to cope with the change towards digitisation and networking in connection with Industry 4.0, develop new business models and convert its own production.
Suppliers to the automotive industry would have to develop production systems for new drive trains. Companies wanting to offer and use generative manufacturing processes would need new types of designers who could also convert the advantages of the processes into products. According to this, not less, but more and differently qualified employees are in demand. “The shortage of skilled workers, combined with the further reduction in working hours as currently demanded by the union, could finally torpedo the positive overall development of the industry,” Prokop points out. In any case, it should be impossible for many small and medium-sized companies to compensate for losses by reducing working hours, possibly even by compensating wages.
At present, however, employment in the machine tool industry is also showing a slightly positive trend. In the first quarter of 2018, the number of employees increased by 2.2 % year-on-year to a total of 71,962. In the previous year, there were only 70,407 employees.