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Machine Tool Orders Slowing, VDW Reports

Despite considerable year-over-year expansion, reduced demand during the third quarter of 2018 is attributable to a slowing global economy, according to the German trade association

The German machine tool industry recorded a 2% year-over-year decline in new orders during the third quarter of 2018, with domestic orders falling 1% and export-orders 2%. Despite the Q3 setback, the German Machine Tool Builders' Assn. (VDW) reported members’ new orders increased by 7% year-over-year during the first nine months of 2018. Domestic orders grew by 20%, and orders for export rose by 1%.

"Orders and production are set to make 2018 a record-breaking year," stated Dr. Wilfried Schäfer, executive director of the VDW. "Nevertheless, for the first time in more than a year we are currently seeing a slight downturn in orders.

VDW represents manufacturers in Europe’s largest machine-tool manufacturing industries, and one of the largest in the world.

VDW (German Machine Tool Builders' Assn.)VDW 3Q 2018 chart

2018 order intake for the German machine tool industry: as an index: according to VDW, the industry is “on course for a record year.” This graph uses an index of 2015 shipments = 100. here Index basis shipments 2015 = 100, data until September 2018.

"The boom is gradually coming to an end and demand is normalizing," Schäfer continued. VDW attributed this development to a slowing global economy, in particular slower growth in demand outside the Euro zone.

“On the other hand, the strong domestic demand in the second half of 2017,” according to Schäfer, who offered the strong volume of new orders concurrent with EMO Hannover, in September 2017, which now reflected responsible for a decline in current year-over-year order levels.

“And finally, global developments – including the spread of trade conflicts, increasing protectionism, rising oil prices, high inflation in various emerging markets, unchecked debt, etc., are unsettling customers, especially small and medium-sized enterprises,” Schäfer said.

For comparison, U.S. machine-tool new orders through September are 27% higher than the comparable January-September total for 2017.

In terms of machine tool production, VDW reported that January-September 2018 sales for German machine tools are up 13% year-over-year. However “it will not be possible to sustain this double-digit growth over the year because production skyrocketed at the end of 2017," Schäfer forecast. Even so, growth in sales prompted the association to raise its production outlook by 1%, up to 8% or €17 billion year-over-year for 2018.

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