The European Assn. for the Machine Tool Industries and Related Manufacturing Technologies (CECIMO) issued a new forecast for machine-tool orders and manufacturing demand that predicts a significant decline for the sector's 2020 activity, largely as a result of the global COVID-19 pandemic. The end of the pandemic and the social restrictions associated with it may spark a quick reversal of the trends later this year.
However, the current situation is playing out amid already slow E.U. industrial activity, with lower volumes for new orders and deliveries of machine tools. During 2019, total CECIMO machine-tool output decreased -4.1% from the 2018 level.
CECIMO is a consortium of machine-tool trade associations for 15 countries, which represent approximately 1,500 business in Europe (EU, plus EFTA and Turkey), and 98% of the total machine-tool production in Europe and about 33% worldwide. Over 75% of CECIMO production is shipped abroad, and half of it is exported outside Europe.
The group's Machine Tool Outlook Forecast (Spring 2020), conducted by Oxford Economics, shows the region's Q1 2020 machine-tool order intake is still declining. Compared to Q1 2019 data, CECIMO domestic orders fell -34%, foreign orders fell -30%, and total orders fell -29%.
The European results are consistent with the recent U.S. Manufacturing Technology Orders report data, which showed April new-order totals down -37.8% year-over-year, and the current year's orders total of $1.097 billion indicating a -28.2% decline from January-April 2019 new orders.
CECIMO predicts continued weakness in industrial activity and new orders through the second quarter of 2020, but then a quick recovery during Q3 and Q4 as the global COVID-19 pandemic abates and social confinement measures are rescinded.
Specifically, the European machine-tool consumption is forecast to decrease -25.8% overall in 2020, a decline in demand that is closely tied to the effects of the pandemic on machine-tool buying sectors.
"Especially relevant is the case of the automotive industry, one of the key machine-tool consumers," according to CECIMO. "Demand for automobiles has decreased sharply in Europe, North America, China, and elsewhere, which has hindered the sectoral demand for capital goods, namely machine tools."
European automakers' machine-tool investments are forecast to drop -10.7% in 2020, according to Oxford Economics. In addition to the pandemic, this trend "generally unclear sustainable car policies, which is already having a deep impact on the overall demand of cars."
The European machine-tool industry will recover in part during 2021, according to the report, as manufacturing activities return to normal conditions: forecast consumption estimates show a 19.6% year-over-year rebound in 2021 European machine tool consumption. Machine-tool consumption would stabilize by 2022 in this scenario, maintaining a growth rate of 5.0% in 2022.
