The VDW (German Machine Tool Builders' Association) expects production in the machine tool industry to grow by 9 percent this year to a volume of 15.5 billion euros. At the annual press conference in Frankfurt am Main, Franz-Xaver Bernhard, Chairman of the VDW, said: "We have largely overcome the effects of the coronavirus crisis. This is reflected in the production trend and in order intake, which is also only just below the record result of 2018."
The industry is entering the current year with a significant order backlog. Even if the gap between orders and turnover is currently closing, the Federal Statistical Office reports an order backlog of twelve months for the machine tool industry. "This means that companies are well prepared for a potential slump in orders in the first half of 2023, as is currently emerging," explains Bernhard. Capacity utilization is rising continuously and was back at 91.1% in January. Accordingly, 45% of machine tool manufacturers are cautiously optimistic about the current year, according to the results of the latest VDMA flash survey at the beginning of December.
In macroeconomic terms, the forecast is supported by the assumption that inflation has peaked. Energy and commodity prices have left their highs behind. The lifting of Covid restrictions in China, the largest market, will stimulate business. Other Asian countries such as India and the Asean region are also contributing to growth. Global investment is increasing for the third time in a row, albeit at a slower pace than in the past two years. As a result, international machine tool consumption is benefiting from this.
In Germany, too, investments are expected to return to growth after three years in the doldrums. In Germany, the automotive industry in particular had curbed its purchases because it was unable to produce due to the chip shortage. "The machine tool industry has taken advantage of the transformation process in the automotive industry and diversified its customer structure more strongly. According to our customer structure survey, their share fell from almost 43% in 2019 to around 31% in 2021," explains the VDW Chairman. In contrast, mechanical engineering and the manufacture of metal products have grown.
The mood in Germany has improved. The Ifo business climate index for the capital goods and machine tool industries rose sharply in January. Expectations in the automotive industry have even turned positive again. The global purchasing managers' index also rose slightly for the first time in twelve months, particularly in the eurozone with key markets such as Italy, Spain and France, as well as the UK and Turkey.
Double-digit growth in 2022
According to VDW estimates, machine tool production already grew by a tenth last year, three points more than expected in the fall. This corresponds to a real increase of 3 percent and a volume of around 14.1 billion euros. "More machines can finally be completed and delivered, as the supply situation has improved for many metal components," says Bernhard. However, electronic components remain a bottleneck.
After a weak previous year, domestic sales grew by 16% in 2022, more than twice as much as exports at just 7%. Europe brought up the rear within the triad. Eastern Europe performed particularly poorly because trade with Russia has largely collapsed. Cumulatively, German deliveries have fallen by almost 80% since 2018. Italy was exceptionally strong, driven by a massive subsidy policy for the purchase of machinery in the past two years. Exports to Asia increased by 11%. Exports to Thailand, India, Japan and South Korea in particular grew strongly. China was the driver in the previous year. In 2022, the zero Covid policy made it more difficult to deliver machines. Some were replaced by local production. Finally, America was the driving force with a 24% increase, driven by Brazil, the USA and Mexico. As the second largest market, the USA is gaining in importance and, with an export share of 14.7%, is moving closer to China, which accounts for 18.7%.
In December 2022, employment in companies with more than 50 employees was estimated at 65,400, 2% more than in the previous year. In the entire coronavirus pandemic since 2019, a total of 13% of employees have been laid off. Production fell by 17% in the same period. In addition to pandemic-related losses, this is also due to the transformation process at the automotive customer.
Better training and development of skilled workers
In a survey, 31% of machine tool manufacturers reported a new, serious challenge that is becoming increasingly acute. For a further 50 percent, it is already a noticeable problem. It is the serious shortage of skilled workers.
"The shortage of skilled workers is likely to remain an ongoing issue because it has a structural cause in demographic change. The figures for the entire mechanical engineering sector confirm the precarious situation," says VDW Chairman Bernhard.
The number of vacancies in the mechanical engineering sector is rising rapidly in relation to the overall increase in personnel, up 20 versus 1.3 percent. A good half of mechanical engineering companies are planning to increase their workforces. However, according to calculations by the German Economic Institute, the supply of skilled workers in the mint subjects will only cover half of the industry's requirements at best in the coming years. According to the Federal Employment Agency, there are currently major bottlenecks in the professions of mechatronics technician, automation technology, metal cutting, mechanical and industrial engineering and electrical engineering. In the last training year 2021/2022, over 11,000 of 97,000 training places offered in occupations relevant to mechanical engineering remained unfilled.
Education experts advise strengthening training, keeping existing skilled workers in their jobs for longer and providing them with the best possible further training. For many years now, the Young Talent Foundation for Mechanical Engineering has been working to enable qualified technical training so that companies can choose from a top range of applicants whose qualifications also meet the actual requirements.
In future, the Nachwuchsstiftung Maschinenbau will work more closely with didactic partners in order to tailor learning content on highly complex technologies to the respective target groups and prepare it didactically. The foundation's own learning platform MLS (Mobile Learning in Smart Factories) will also be upgraded for this purpose. An integrated authoring tool based on the didactic principle of complete action enables users to create their own learning content and thus already supports digital training in all professional fields.
MLS now has 22 interfaces to content partners and training management tools. This means that the digital training of metal professions and, in future, electrical and automotive professions will also be supported by external content partners. The expansion to commercial professions is also in preparation. "The impetus for this came from customer demand. Trainers in companies want to use a single platform for all their training occupations," reports Bernhard from the VDW. The platform is also increasingly being used in vocational training.
"Tackling demographic change in the long term requires staying power. Creative ways of recruiting young talent must be added to further training so that young people have the opportunity to develop an enthusiasm for the professions in mechanical and plant engineering. We all have a role to play here," concludes Bernhard.
