Year-over-year demand has improved during the first half of 2022, but sales and deliveries confirm that one of the world’s largest sources of machine tools is caught in the uncertainty of supply-chain gaps, inflation, and global tension.
German manufacturers reported that new orders for machine tools increased 24% year-over-year during the second quarter of 2022, and 34% year-over-year for the first six months of 2022. It’s the second consecutive strong result for orders by the German Machine Tool Builders Association (VDW), which represents one of the largest components of the mechanical engineering sector in that country, and one of the largest machine-tool manufacturing industries in the world.
For comparison, the US machine tool orders rose 13.1% year-over-year during the first half of 2022.
By other standards, including machine tool sales and shipments, VDW members are caught in the familiar uncertainty shaping industrial activity in the US and elsewhere. Executive director Dr. Wilfried Schäfer listed the Russia-Ukraine war, the growing energy-supply shortage and price increase, particularly in Europe, and the apparent decline in Chinese economic growth.
To these Schäfer added the concern for geopolitical danger for manufacturers active with Taiwanese businesses, another major player in the machine-tool and industrial sectors.
“Despite the current difficult conditions, (German) machine tool orders continued to develop well in the second quarter. In relation to the first half of the year, volumes are even almost at record levels from 2018,” commented Dr. Wilfried Schäfer, executive director of the VDW.
German machine-tool manufacturers’ domestic orders from rose 35% during the first half of 2022, while foreign orders rose 33% during that time.
“Foreign business is primarily supported by demand outside the EU. In particular, our two lead markets China and the USA remain strong. The severe lockdown in Shanghai and other Chinese cities did not leave any deeper traces in the second quarter,” said Schäfer.
He noted that demand for cutting machinery was twice as strong than for forming machinery, projecting that, “This is an indication that major projects in the automotive industry are currently on hold, especially in Germany.”
Machine tool sales continue to be a concern, with the figure for 2022 first-half sales at 7% higher than for 2021. VDW reported this result amounts to stagflation.
“Accordingly, as feared, the supply chain problems are far from over with all capacity utilisation rising from 85.9% in April to 87.4% in July.”
A majority (70%) of all German machine tools are produced for exports, which increased 5% year over year during the first half of 2022, and 11% of those were exported to Asian buyers. However, just 5% of that volume were shipped to China, the largest export market for German manufacturers. Japan, India, and some other Asian markets posted double-digit growth rates during the first half of 2022.
Deliveries of German machine tools to US buyers increased 9% year-over-year during the first six months of 2022, while European shipments flattened – in particular shipments to Eastern Europe and Russia. Exports to Western European markets increased during the period, according to VDW.
Imports of machine tools to Germany rose 16% year-over-year, led by products from Asian manufacturers.
“They are obviously able to circumnavigate the supply chain problem better,” Schäfer proposed.