German Machine Tool Industry Surges Ahead In 2022
Orders received by the German machine tool industry in the fourth quarter of 2021 were 51 percent up on the previous year’s figure. Orders from Germany rose by 62 percent. Foreign orders were 46 percent higher than in the previous year. In 2021 as a whole, the level of orders received by German manufacturers rose by 58 percent. Domestic orders were 51 percent higher than in the previous year, foreign orders 62 percent.
“This great result reveals how German manufacturers have worked their way out of the Covid crisis,” says Dr Wilfried Schäfer, Executive Director of the VDW (German Machine Tool Builders’ Association), commenting on the result. “Orders are also 11 percent higher than in 2019, the year before Covid,” Schäfer adds.
German Machine Tool Manufacturers Close 2021 With Full Order Books
The recovery in overseas order levels is broad-based across all the different regions. Europe recorded the strongest growth at 90 percent. The Americas and Asia were up 66 and 61 percent, respectively, on the previous year. Within Europe, both Italy and Austria were supported by massive investment funding programs and came back very strongly, as did the Czech Republic. While the level of orders from Austria only returned to normal in the second half of the year, that from Italy remained at a high level throughout the year. The two lead markets, China and the USA, also performed strongly. Overall, however, the USA has shown stronger momentum and narrowed the gap to China.
“2022 has a good chance of being a successful year for the machine tool industry,” said Franz-Xaver Bernhard, Chairman of the VDW. The industry has been experiencing a strong and broad-based upswing in terms of its markets and customer sectors since last year. A 14 percent increase in production is forecast for 2022.
Biggest Challenges – Supply Bottlenecks and Shortage of Skilled Workers
“Bottlenecks in the supply chains of electronic components and metal products were key negative factors for the industry last year, and they have not yet been resolved,” Bernhard reported. Nearly all machine tool industry manufacturers were affected by the end of 2021, according to a survey.
The chip shortage in particular is hitting companies two-fold. On the one hand, the automotive industry as a key customer only has limited supply capability. On the other hand, there are not enough chips for machine controllers, gateways, edge computers or drives. This is delaying the completion of machine orders.
The chip shortage resulted in a decline in orders at the beginning of the Covid pandemic. This in turn caused the shut-down of capacities and the diversion of supplies to the consumer goods industry. It takes time to establish production capacity for new chip generations. Cargo space is also being restricted by airport and port closures in China as part of the country’s strict zero Covid and lockdown policy. “This can escalate again at any time,” Bernhard warned. For some time now, businesses have also been stockpiling, which has led to higher demand for some products and put additional pressure on suppliers.
There are very limited opportunities for the machine tool industry to influence and compensate for this problem in the short term. Changing over to a new generation of chips takes time, as this can easily involve several man-years of development. “For the time being, the only option is to be highly creative in the procurement of materials and to accept higher prices that may not be possible to pass on,” said the VDW chairman. In the medium term, it will become increasingly important to establish stable supply chains and diversify the number of suppliers in order to reduce dependencies.
For more information: www.vdw.de