Mechanical engineering industry in Germany regains strength

Companies in the mechanical and plant engineering sector will close the crisis year 2020 with significant negative rates, but these will not be as severe as expected.

"For quite a few companies, this year - in the shadow of the corona pandemic - is likely to be the most difficult in decades. This makes it all the more remarkable that the companies have been able to maintain their production and service levels and keep staff cuts within narrow limits," summarised VDMA President Karl Haeusgen at the association's virtual annual press conference. "Creativity, loyalty and cohesion within the companies were intensively positive experiences. The mechanical and plant engineering industry has played an important role in keeping the economy going and thus in continuing to provide a stable economic foundation in Germany," he emphasised.

In view of a better-than-expected third quarter, the VDMA has revised its production forecast for 2020 slightly upwards. Instead of a 17 per cent decline in real output, VDMA economists are expecting a drop of only 14 per cent. According to the German Federal Statistical Office, production in the machinery and plant engineering sector fell by 13,1 percent in the first ten months of the current year. The slight improvement in the economic climate is also affecting the forecast for 2021. "We now expect real production growth of 4 per cent, instead of the previously expected plus 2 per cent," said Haeusgen.

However, he warned that this forecast was more uncertain than usual. The high degree of uncertainty in the global economy is particularly affecting the machinery and plant engineering industry, he said, "it is poison for the capital goods industry“. He added that protectionism and the rapid structural change in the key customer sector of vehicle manufacturing were also a factor. And: "Liquidity bottlenecks in the upswing will be the real challenge in 2021," explained Haeusgen. After all, as the economy and order situation improves, machine builders will have to shoulder advance costs.


However, further developments also offer opportunities: "We see the economic acceleration from the Corona-dip on the one hand and an acceleration of technological change on the other. Given this double impulse there is exciting potential for European mechanical engineering, for all those who find the right answers to these challenges," said Haeusgen.