Exceeding all expectations

German machine tool production hits a record high in 2000.

German machine tool production hits a record high in 2000.

For the German machine tool industry, final figures for the year 2000 surpassed all the expectations held earlier in that year. Mid-year predictions anticipated a 3% increase in production as compared to 1999, but instead, production rose by 9% to DM 18 billion. That total also beats the 1991 record figure of DM 17.2 billion. In addition, German exports set records with a 14% increase for a total of DM 10.1 billion.

German machine tools were in high demand both within Germany (+15%) and abroad (+62%), the determining factors being the weakness of the Euro, the sudden rise of demand in certain areas of Asia, the investment in export-oriented industrial branches of the EU, and the stabilizing economic conditions in the U.S.

Including September 2000, orders received from the U.S. increased by 36% as compared with the same period the year before, reaching more than DM 1 billion. By value, France, Italy, Great Britain, and Switzerland were next in the ranks of greatest demand from foreign countries.

Orders from Mexico and the People's Republic of China as well as from Spain and the Czech Republic increased with three-digit growth rates. Supported by the high buying power of the Yen, orders from Japan nearly doubled (+92%).

The German machine tool association (VDW) reports that the German machine tool industry is in a phase of strong economic upswing supported by demand from abroad since late in 1999. Machine tool export figures immediately reflected the increase of foreign orders. The export volume of 2000 was more than DM 1 billion above the 1999 level.

The association cites that support for German machine tool exports came partially from the Euro losing 22% of its value against Japan's Yen and 15% against the U.S. dollar. However, the association believes that this effect was not the sole reason for the increase because there is only a weak correlation between general demand for machine tools and an exchange-rate drop.

In the first to third quarter of 2000, Western Europe was the most important sales region for the German machine tool industry. Its share in total German exports of machine tools rose from 46% to over 50%. Seven of the ten major export markets were within Western Europe. France, Italy, Great Britain, Switzerland, and Austria regularly figure among the most important customer countries. In Eastern Europe, the Czech Republic, Hungary, and Poland were the biggest markets.

The U.S. is still, by far, the dominant sales market for German machine tools. In 1999, German exports to the U.S. were able to reach the previous year's high volume of DM 1.6 billion, despite a shrinking U.S. market. During that same period, total consumption of machine tools in the U.S. decreased by almost one-fifth, with imports dropping by 13%. VDW believes that Germany's high-tech products were the driving force behind the German machine tool industry's substantial market share increase in the U.S.

In the Asian area, German machine tool exports continued a downward trend, dropping back during the first three quarters of the previous year to a share of merely 11% in total German exports. In South Korea, Singapore and Malaysia as well as in Japan, German supplies rose again, but in Asia as a whole, exports decreased by 11.5% during 2000.

After machine tool imports to Germany increased strongly in 1998, growth declined distinctly in 1999. While overall German consumption in 1999 rose by 13%, imports only increased 6% to DM 5.6 billion. The import quota (share of imports in consumption) consequently reduced from 45% in 1998 to 42% in 1999. For 2000, the import quota reached 43%, one percentage point higher than the year before.

Switzerland traditionally is the biggest foreign supplier to the German market. Almost one quarter of all imports originate from that neighboring country. A special domain of the Swiss is electrical discharge technology, which contributes to a substantial part of the imports.

During the first half of 2000, Japan has won back second rank from the Italian machine tool manufacturers. Japan's share in imports to Germany has been successfully built up from 10% in 1997 to 13% in 2000. Six of the ten major supplier countries for the German import market come from the EU, among them Italy and France — ranking at third and fourth. During the first half of 2000, imports from Austria and the Netherlands have also risen substantially.

The association predicts an 8% increase in production for 2001.

The favorable estimate is based on DM 3 million in backlog orders from 2000, and the potential for increased machine tool technology demand prompted by the upcoming EMO show in Hannover this September.

Key Figures of the German machine tool industry

1995-2000

%-change
1995
1996
1997
1998
1999
2000
1998/97
1999/98
2000/99

Production

bil DM
12.4
13.4
14.0
15.8
16.6
18.0
+13
+5
+9
Cutting
8.4
9.4
9.8
11.0
11.7
12.7
+13
+6
+8
Forming
4.0
4.0
4.3
4.8
4.9
5.3
+13
+1
+9
Exports
bil DM
7.6
8.5
8.5
9.3
8.9*
10.1
+9
-5
+14
Domestic sales
bil DM
4.8
4.9
5.5
6.5
7.7
7.9
+18
+18
+3
Imports
bil DM
3.3
3.7
4.2
5.3
5.6*
6.1
+26
+6
+8
Domestic consumption
bil DM
8.0
8.6
9.7
11.8
13.3
14.0
+21
+13
+5
Order intake
bil DM
14.7
13.2
15.4
18.1
15.5
21.3
+17
-14
+37
Domestic
6.7
6.2
6.9
9.2
8.2
9.4
+33
-11
+15
Foreign
8.1
7.0
8.5
8.9
7.3
11.9
+4
-18
+62
Employment
68,300
66,300
63,900
65,700
66,000
67,100
Capacity utilization
%
91.7
88.4
89.5
93.5
92.3
96.8
Cutting
93.2
88.3
89.2
94.8
92.4
98.5
Forming
88.2
88.9
90.1
90.6
92.0
92.6
Order backlog
Months
8.3
6.9
7.1
8.2
7.2
8.3
Cutting
-
6.6
6.7
8.0
6.8
7.9
Forming
-
7.4
7.7
8.5
8.0
9.1
*Revised **End of year
Sources: VDW, German Statistical Office, Ifo-Institute, VDMA
TAGS: Features
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