The slump in orders among Europe’s mechanical and plant manufacturers continues

German and Italian associations report losses.

The slump in orders among Germany’s and Italy’s mechanical and plant manufacturers continues. Both the VDMA of Germany and the Ucimu-Sistemi per Produrre of Italy have sent out press releases reporting a fall in sales in the machine tool industry.

In October, price-adjusted orders fell short of the previous year’s level by nine per cent, according to VDMA. “For the first 10 months of the current year, this means a total decline in orders of eight per cent. The fact remains that clients in mechanical engineering are very cautious about making new investments. The weakening economy has been causing problems for the industry, which employs over 1.2 million people in Germany alone, for months. Demand in important sales markets (China and the USA) is weak, trade conflicts could spread and further fuel uncertainty. There are also concerns about the competitiveness of Germany as a location,” commented VDMA chief economist Ralph Wiechers.

No more tailwind from large orders
In September, the VDMA once again significantly lowered its expectations for the year as a whole. Since then, the association has assumed that price-adjusted production will be around eight per cent below the previous year’s level. The industry is preparing for a two per cent decline in production by 2025. In October of 2024 there was at least a glimmer of hope for domestic orders, it is said. Here, mechanical and plant manufacturers recorded three per cent more new orders than a year ago. However, domestic business was particularly weak in the same month in 2023. Orders from abroad in October were 14 per cent below the level in October 2023. At that time, companies were still benefiting from large orders.

Italian machine tool industry suffers a sharp fall in production
Based on preliminary data, production in 2024, stood at 6 745 million euros, an 11.4% drop over the previous year, said Ucimu-Sistemi per Produrre. The downturn was due to the sharp contraction of deliveries by manufacturers on the domestic market, which at 2 255 million euros were 33.5% less than in 2023. Riccardo Rosa, Ucimu’s president, said the measure of this weakness is further verified by domestic consumption, which collapsed by 34.8% to 3 795 million euros, a trend also impacted by imports, which fell by 36.5% to 1 540 million euros.

He added: “However, the performance of Italian manufacturers on the foreign markets was different, as highlighted by the figures for exports, which compared with 2023 grew by 6.3% to 4 490 million euros, a new record value never achieved before.”

Mr Rosa added: “After the summer, it became clear that 2024 would be ‘a completely lost year’ for the Italian machine tool industry, which tried – albeit unsuccessfully – to save the final outcome through overseas activity. Once again, the year closed by highlighting the ability of Italian manufacturers to orient their business rapidly towards the most dynamic areas in the world, starting with the USA, where we have been doing well for many years now.”

“However, looking beyond, the fear that the new US administration may decide to implement a new tariff policy on goods related to our production puts us on alert and forces us to carefully consider our internationalisation activities. However, the big problem for Italian manufacturers remains the domestic market which, after consuming at an unprecedented pace, is struggling to restart.”

The association also says it does not expect 2025 to significantly improve, although a weak trend reversal is anticipated.