New Orders Are Steady, Sales Are Flat for German Machine Tool Builders

New Orders Are Steady, Sales Are Flat for German Machine Tool Builders

Domestic orders stabilize VDW’s results, but demand from U.S. needed to reach growth targets German demand +18% Foreign demand down -1% “… foreign customers hold back”

VDW’s graphic shows the trend and actual results for new orders for machine tools through June 2014.

Germany’s machine tool builders are nurturing their recovery, drawing second-quarter 2014 new order volumes that were 1% higher than during 2Q 2013, and first-half 2014 new orders that were up 6% over the comparable period of 2013. The results from VDW, the German Machine Tool Builders' Association, along with recent reporting by the machine tool trade association in Italy and the federation of trade groups from across the European Union, indicate that the regional recession that set in during 2012 has been stanched.

By comparison, the latest result for U.S. machine tool orders, showed six-month total for 2014 machine tool orders were down 2.7% compared to the January-June 2013 period.

Notably, the VDW reported that domestically sourced new order rose by 18%, while demand from abroad was down by 1%. 

“German machine tools were still in demand during the year’s first half,” according to Dr. Wilfried Schäfer, executive director of VDW, adding that demand from domestic market gained significance in the reporting, though the foreign new orders fell behind in the year-to-year comparison.

“The general uncertainty due to numerous trouble-spots is causing foreign customers to hold back on new investment projects,” Schäfer said, and this is being demonstrated in the 2014 second-quarter results. Those results have been caused by falling demand outside the E.U. Within the region, new orders increased 13% year-on-year.

As for sales of new machines during the first half of 2014, the VDW members finished even with the past year’s result.  “For the production output, we are nonetheless staying with the growth forecast of 3% in the ongoing year,” Schäfer emphasized. He acknowledged this an ambitious goal, one that will required a revival in demand from abroad.

In the first half of 2014, machine tool sales shifted toward German customers, in parallel to the trend in new orders. By contrast, exports of German machine tools declined during the period, including deliveries to China, South Korea and India.

“Business with Asia is proving more sluggish than we’d hoped,” Schäfer confirmed.

However, with international industrial production output and capital investment forecast to gain momentum during the remainder of 2014, and having maximized their potential in their own region, the VDW members are counting on U.S. market demand to pull them to their 2014 sales targets.

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