German Mechanical Engineering On Course for Growth

Oct. 4, 2012
When the VDMA, the German engineering federation, predicted a 2 percent increase for German machinery production in 2013, some people couldn’t believe their eyes.

In light of the strained political and global economic situation, this seems a quite optimistic estimation.

The VDMA is considered fairly reliable in regard to its prognoses and doesn’t normally make use of calculated optimism. It does represent the mechanical engineering industry, of course, and as such will act in its members’ interest. It’s interesting to take a look at the conditions the federation assumes for its 2013 predictions.

Condition number one is the de-escalation of the European sovereign-debt crisis. Although de-escalation is a realistic scenario, it still seems a far cry from dissolving the numerous problems and could be only another way of prolonging the problem. At this point, the fact that Germany doesn’t heed the demands it makes on the southern European nations is, itself, a confession of failure.

The VDMA’s second condition is the recovery of important foreign markets, such as the People’s Republic of China. This poses an equation with a lot of variables. Taking a look at statistics concerning China’s significance for the German Industry, using the term “dependency” is putting it very mildly.

The third, and last, condition is seen to be the good position German mechanical engineers and plant engineers currently find themselves in. Hopefully the VDMA will prove reliable with this prediction as well. This, of course, doesn’t change the fact that the risks remain aplenty. But it is one of many reasons for an optimistic future outlook.

A different picture is painted by ZVEI, the German electrical and electronic manufacturers’ association, for the present situation regarding incoming orders (orders received). ZVEI represents manufacturers of electrical automation engineering, among others. According to them, industry orders for the January to July 2012 period decreased by 10 percent compared to the previous year. In-country orders especially took a sharp decrease of 16 percent, whereas foreign orders got off fairly lightly with a moderate minus of 3 percent.

Regarding revenue, ZVEI reported a minus of only just under 1 percent compared to 2011 for the same period. Altogether, the association describes the economic situation as robust. A positive sign according to ZVEI is the fact that the Ifo Business Climate Index for August increased after declining three months in a row.

All things considered, the future outlook for German mechanical engineers and plant manufacturers is still optimistic. Technological head start, successful marketing strategies and strong distribution are and continue to be key factors for the branches’ international prosperity.

Martin Buchwitz, [email protected], is Editor in Chief of SPS-Magazin in Germany.

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