Italian Machine Tool Orders Up +10.5% in Q1

Weak domestic demand prompts call for nation to promote, support re-investment to maintain global competitiveness.

The Italian machine tool builders association, UCIMU, reports that its member companies’ first-quarter index of new orders rose 10.5% versus the first quarter result for 2011. Demand for new machines was almost entirely the effect of foreign orders, which rose 12% over the comparable period for 2011, while domestic new orders increased a scant 0.1%, UCIMU revealed.

The result contrasts with the recent report from the German machine tool builders’ association, VDW, which said its members’ Q1 new orders fell 7%, with domestic demand stronger than foreign demand. However, VDW noted that its members’ new orders from Southern Europe showed weakness related to the EU debt crisis, which was consistent with UCIMU’s concern over weak domestic demand.

UCIMU said the overall 10.5% increase over with the same period of last year prolongs a nearly continuous trend of quarterly growth during the past two years — a decline in Q4 2011 was the exception to this progress — and confirms “the good performance of the Italian enterprises of the sector,” according to its statement. “When assessing the data, it is however necessary to consider that the result was determined, once again, only by foreign demand.”

The 0.1% increase in domestic (Italian) demand for machine tools during the first quarter of 2011 “shows all the weakness of the home market, (where) demand remains stagnant,” the group continued. UCIMU president Giancarlo Losma declared that Italian manufacturers’ “investment freeze in production technology” portends the nation’s risk of losing its industrial competitiveness, “at all levels within the production chain."

Failure to update production plants, Losma reasoned, directly impacts manufacturing processes and therefore on products “made in Italy,” which he said then risk being bested by products manufactured in other countries.

“The danger that our industrial system may be left behind is even stronger when we consider that the competitors, many of which have recently appeared on the international scene, are continuing to invest in advanced, efficient, eco-compatible machinery capable of meeting safety and energy-saving requirements, reducing more and more the historic gap with the Italian industry," he said.

“Without a precise industrial development strategy, the current downsizing of the manufacturing sector will become an irreparable process, with detrimental consequences for the economic and social frameworks of the country,” Losma warned. “For this reason, it is necessary that the government authorities give a clear signal of support to the enterprises, particularly medium-to-small ones which, when taken as a whole, represent the biggest source of employment.”

Specifically, Losma called for Italian officials to direct resources to projects that will support industrial recovery.

“Enterprises, and not only those of the machine tool sector, are fighting … to retain the positions gained, intensifying business in those areas that show competitiveness,” Losma said. “However, not all of them can operate on the international market: many small production units have been built and set up to operate in the domestic market. It is to them, that the government activities must immediately turn their attention to, ensuring that in such complex situation they will not feel left to themselves."

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