Exports Sustaining EU Machine Tool Builders

June 6, 2013
European machine tool producers are increasingly dependent on exports Sluggish EU demand “becoming a worrying trend” Restoring growth of domestic consumption is “vital,” CECIMO execs said

European machine tool shipments grew 6% in value during 2012 over the previous year, increasing to €22.2 billion. However, the region’s machine tool builders continued to rely heavily on exports for growth, as “business confidence” deteriorated in the European market.

The information was released by CECIMO, the European Association of the Machine Tool Industries, which also forecast that global demand would drive a 15% increase in new machine tool orders this year, to €22.5 billion (or $29.5 billion).

CECIMO is a consortium of 15 national associations of machine tool builders, representing approximately 1,500 industrial enterprises in the E.U., European Free Trade Assn. (EFTA), and Turkey, and covers more than 97% of total machine tool production in Europe and more than 33% worldwide.

Of the total 2012 shipments, exports amounted to €18.8 billion ($24.6 billion) during 2012, or about 85% of the total shipments. That was a 9% increase over 2008, a record-setting year for CECIMO’s machine tool shipments.

By contrast, European machine tool consumption contracted about 2% during 2012 versus 2011. “The sluggish consumption in Europe is becoming a worrying trend for European machine tool builders, despite the market success that they enjoy in emerging markets,” CECIMO stated.

The group noted that since the economic crisis in 2008-2009, machine tool manufacturers in the region had suffered from tightening credit availability and increasingly restricted access to financial resources.

“The economic uncertainty suppresses investment activity of companies and, at the same time, the financial institutions apply lending criteria that exclude small and medium-sized machine tool enterprises from their portfolios, because of the highly cyclical nature of their performance,” it stated.

Limited Credit Restrains Demand

“The seriously limited access to credit plays an important role in contracting domestic demand,” the statement continued. “It places machine tool sector under high pressure.”

On several occasions last year CECIMO expressed concern that economic regulators in the EU and various nations were not providing sufficient incentives to promote industrial activity in the region.

Relying so heavily on exports for growth raises operating costs for machine builders, the group noted.

“A dull domestic market leads to the rupture of vital links between suppliers and their traditional customers, disrupting the innovation cycle,” opined CECIMO president Martin Kapp. “Innovation in the machine tool industry thrives in a strong eco-system in which producers interact closely with customers.”

He added that small- and midsized enterprises drive innovation in the industry, and rely heavily on demand from European customers — and thus are disproportionately affected by weak EU demand. “Therefore, restoring growth in domestic consumption will be vital for securing that future innovations continue to come out of Europe.”

CECIMO welcomed a recent European Commission statement on Industrial policy, which identified “advanced manufacturing technologies for clean production” among six priorities areas for driving economic growth in Europe.

“In the manufacturing industry, the most straightforward way to cope with fierce global competition is to facilitate the promotion and diffusion of new production technologies towards industrial users,” opined CECIMO director general Filip Geerts. He predicted that gains in productivity, and greater efficiencies in resources and energy management by machine tool builders, would help to reduce carbon emissions in Europe.

About the Author

Robert Brooks | Content Director

Robert Brooks has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries. His work has covered a wide range of topics, including process technology, resource development, material selection, product design, workforce development, and industrial market strategies, among others. Currently, he specializes in subjects related to metal component and product design, development, and manufacturing — including castings, forgings, machined parts, and fabrications.

Brooks is a graduate of Kenyon College (B.A. English, Political Science) and Emory University (M.A. English.)

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