News Source: www.fag-zc.com
2008 was another record year for Germany's machine tool industry: the total output of machine tools increased by 12% compared to the previous year, with a production value of approximately 14 billion euros, marking the fifth consecutive year of new highs. However, it would be unwise to ignore the decline in international market demand and investment based solely on this. This impact became evident in the fourth quarter of 2008: German machine tool orders experienced their first negative growth in five years, declining by 11% overall compared to 2007. Domestic orders fell by 14%, while overseas orders dropped by 9% year-on-year.
The German Machine Tool Builders Association (VDW) had predicted that market demand would show a noticeable decline in the second half of 2008. After all, economic growth had peaked in 2007.
Due to the financial crisis, the international automotive industry and many suppliers significantly cut their budgets, increasing the hesitation of many companies when making new investment decisions, worsening the already cold economic environment. Given this, VDW expects the decline in Germany's machine tool production for the year to be roughly around 15%. Although the high order volume from last year ensures a certain level of machine tool consumption this year, it will only be similar to the production levels of 2006/2007.
It's not just German manufacturers facing difficulties. All other competing countries have seen significant drops in order volumes, forcing these suppliers to adjust their 2009 revenue targets downward accordingly.
It is worth noting that until the end of last year, Germany's machine tool exports still performed quite well. Even in November, shipments increased by 6% year-on-year. The standout contributors were the East Asian and South Asian markets, with China showing particularly remarkable growth, increasing by one-sixth compared to the same period last year.
For German suppliers, sales in the Chinese market clearly outpaced other regions in 2007, with a sales increase of 17%. VDW predicts that despite the turbulence in the economic environment affecting China, sales in this market will remain at the forefront in the future.
In the process of expanding the Chinese market, German machine tool manufacturers have made important contributions to its growth. Even during difficult times, they will continue to be reliable partners for Chinese customers, having established solid trade relationships with them before the recent high-growth phase ended.
Currently, the group of German manufacturers has an excellent structure. During the boom period of the machine tool industry, they gradually developed outstanding business models and corporate cultures. This prompted them to focus on R&D, continuously introducing innovative products, solutions, and services to the market. At the same time, they optimized existing assets, improved manufacturing processes and technologies, to ensure more efficient order processing. Currently, employee skills have also been moderately enhanced, and the overall cost structure of the company is becoming increasingly perfect. It is precisely these fine traditions that allow them to navigate through difficult periods with ease.
In recent years, all of the above has become widespread in Germany, and this model is extremely beneficial for creating a more flexible structure in the labor market. Carefully planned work hours and content mean that even during low-order seasons, companies can retain high-quality employees.
Another point worth learning from is that most German suppliers are currently focused on providing specific manufacturing solutions. In some areas where alternative or optional solutions are scarce, they have firmly established their roots. Therefore, they are basically not affected by short-term fluctuations in market demand.
Finally, it should be emphasized that in the future, industries such as energy production will continue to be promising. And due to new challenges in some traditional fields, there will also be development opportunities. For example, the automobile industry's demand for flexibility is increasing, and due to climate and raw material reserve restrictions, new energy-saving, compact engines need to be developed. All these investments will require new production equipment, and German suppliers will certainly not stand idly by.