Mechanical engineering industry expects continued decline in production

Crown crisis Mechanical engineering industry expects continued decline in production

Editor: Nicole Kareta

The corona pandemic is causing great reluctance to invest in mechanical and industrial engineering. Production also suffered in the second half of the year. For 2021, the VDMA expects a small increase in production of 2%.

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The mechanical engineering industry expects a production drop of 17% for the whole of 2020.

The mechanical and plant engineering industry is fighting against the consequences of the global corona pandemic, but also against protectionism in international trade, which continues to be a burden. In addition, industrial changes are underway, particularly noticeable in the automotive industry, an important customer sector. All these factors lead to a significant drop in the key indicators of the mechanical construction sector: order intake, capacity utilization and production. “Incoming orders in the German machine and plant industry fell 16% in real terms in the first seven months, while production was down 14% from the previous year in real terms, ”said Ralph Wiechers, chief economist at VDMA. “Even if there are signs of a slight easing to a low level now, we can expect that weak demand will still have a noticeable impact on production in the second half of the year. We therefore expect a 17% drop in production. for the whole of 2020 “.

Capacity utilization well below long-term average

As a result of the Corona pandemic and the resulting impact on business, average capacity utilization in the mechanical engineering and plant industry has fallen well below the long-term average of 86%. “Between January and July, capacity utilization increased from 84.1 to 76.1%,” said VDMA’s chief economist.

Our industry last hit such a low level in 2010.

Dr Ralph Wiechers, Chief Economist of VDMA

Outlook 2021: Slight confidence

For 2021, VDMA economists basically assume that the global economy will recover – albeit with hesitation and not necessarily without disruption. “For the machine building and plant industry, trees will not grow in the sky next year. We certainly will not reach the pre-crisis level of 2019,” Wiechers said. “We expect production to grow by 2% in 2021,” the VDMA chief economist predicted.

Another prerequisite for any growth is that the Corona pandemic does not paralyze markets and supply chains again, and that the major customer countries of the mechanical engineering industry do not allow themselves to be drawn into new trade wars. . In addition, he stressed that not all sectors of mechanical engineering would benefit equally from a recovery. Manufacturers of capital goods not only suffer comparatively more than other sectors from the persistence of a high level of uncertainty. They have also often been the victims of profound structural change in important customer sectors. “But where there are risks, there are also opportunities. And more than once, a recovery has progressed much faster than initially expected. So the recovery already apparent in the business climate figures could well develop a sustained dynamic of its own “, analyzed Wiechers. .

(ID: 46863924)

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