Mechanical engineering industry picks up speed again

The machinery and plant engineering sector expects to make up, at least in part, for the severe economic Corona setback in the current year. The VDMA has raised its growth forecast for production in 2021 to plus 7 percent in real terms.
Other disruptive factors, such as recurring supply bottlenecks for certain products or the structural change in key customer industries forced by the crisis, are also making themselves felt.
There are increasing signs in the mechanical and plant engineering sector that last year's severe setback can be at least partially made up for in the current year. Admittedly, the Corona pandemic with its restrictions on global trade is still weighing noticeably on companies and their investment plans. "Other disruptive factors such as recurring supply bottlenecks for certain products, the structural change in important customer industries forced by the crisis or the political and economic tensions between the USA and China are also causing uncertainty. But the companies in the machinery and plant engineering sector are showing remarkable resilience even in this crisis and are taking advantage of their market opportunities," said VDMA President Karl Haeusgen in an online press conference before the opening of the Hannover Messe "Digital Edition". "In particular, the prospects for further growth in China and other Asian countries as well as the USA are good. Order intake is clearly on a growth path. The chances that production will grow again, starting in the second quarter compared to the previous year, are also good. Therefore, we are increasing our previous forecast by 3 percentage points and now expect real production growth of 7 per cent in 2021."

10th Corona Flash Survey paints predominantly positive picture
This optimism is confirmed by the current 10th Corona Flash Survey of the VDMA, in which 726 member companies took part. According to this survey, one in four companies (26 percent) has no problems with order losses or even cancellations, and another 40 percent have only minor difficulties. 24 percent of all companies expect further decreasing problems on the demand side. However, about a quarter of the mechanical engineering companies complain about production hindrances as a consequence of bottlenecks in the supply chains.


Employment remains at a high level
The Corona pandemic has forced machinery and plant manufacturers to adjust capacities in recent months, too. However, many jobs were secured with the help of short-time work, so a more substantial reduction in employment was largely avoided. "The companies know that they will urgently need their skilled workers in the upswing and also in order to cope with future tasks. And they are acting accordingly," said Haeusgen. Currently, staff reductions are still taking place in 15 percent of companies. However, the outlook for the end of 2021 is cautiously positive. For the current year, 65 percent of companies stated that they intend to increase their current headcount. Almost half of the companies surveyed (48 percent) are planning to increase their workforce slightly by a maximum of 5 percent. The number of short-time workers in the mechanical and plant engineering sector fell to about 90,000 in March. Overall, machinery and plant manufacturers in Germany employed 1.004 million people in companies with more than 50 employees in January - a decline of 4 per cent from the previous year. With a total of a good 1.4 million people in employment (employees in all companies), mechanical and plant engineering is and remains the largest industrial employer in Germany.

Mechanical engineering industry secures supply even during the pandemic
Already at the beginning of the pandemic more than a year ago, the machinery and plant manufacturers took extensive hygiene and workplace measures to keep production running and thus also secure jobs. "The protective measures for workers have proven their worth and the mechanical engineering sector can continue to make a significant contribution to secure the supply of people. Companies are also willing to organise corona tests for their employees and support vaccinations. Many companies have already put this into practice and their number is growing. "Policymakers should be cautious about shifting more and more burdens onto businesses", Haeusgen warned.
Instead, the joint task of politics and business to prepare and actively shape the time after the pandemic is becoming more and more urgent. Europe's position in the world as well as the fight against climate change must be at the centre of efforts. "We must counter the growing national egoisms with a commitment to openness, cooperation and free trade. And the Paris climate agreement will only be successful if business and politics use their resources efficiently and we bring new technologies to the markets in all their diversity," said Haeusgen.

German federal elections: SMEs need more freedom again
In its core demands for the German federal elections, the VDMA calls for a genuine SME-friendly policy from all possible future government parties. This includes, among other things, openness to technology and innovation-friendly framework conditions as well as a moratorium to reduce bureaucracy. "The federal and state governments must modernise and digitalise their public administration - that means reducing reporting obligations, simplifying planning procedures and speeding up approval processes," demanded the VDMA President.
As an export-strong industry, mechanical and plant engineering also needs open borders in the future, the conclusion of new trade agreements by the EU and bold reforms in export financing. To combat climate change, a political regulatory framework is needed that is open to all technologies and reaches across the boundaries of sectors and energy sources. And to be able to maintain Germany's strong position in the further development of Industry 4.0, Europe needs the closest possible cooperation in digital policy. "It needs an innovation-friendly policy that promotes smart production and, for example, sees artificial intelligence as an opportunity for innovation, thus enabling new business models," Haeusgen said. "Overall, entrepreneurs in Germany need more freedom again so that they can make their contribution to shaping a better future in Europe and worldwide," he summed up.