Mixed results for German machinery sector
Middle East demand still strong as India develops ?brilliantly?
A strong international performance meant sales of German machinery continued to rise despite domestic demand faltering in the first six months of 2011.
According to the German engineering association VDMA, some some sectors are even beginning to approach their record revenue levels of 2007/2008 again.
“However others are still going through a valley of sorrow,” the association said in its six-month report.
In 2010 the German construction equipment and building material machinery industries recorded sales of 10.6 billion euros (6.3 billion euros for the construction equipment sector and 4.3 billion euros for building materials, glass and ceramic machinery). The VDMA estimates that “thanks to good developments in construction machines” the industry will exceed the 10% revenue growth it projected at the start of 2011.
During the first half of 2011 sales in construction equipment were 38% below the record levels experienced in 2008.
“Although profits are being made in some sectors again, there are no grounds for excessive euphoria,” said Dr Christof Kemman, chairman of the VDMA at a recent board meeting in Schrobenhausen. The debt crises in Europe and the United States and the unrest in the Arab world are causing plenty of uncertainty for the future. And the capacities which grew so much during boom times are still far from being fully used again."
While Germany’s domestic market is developing very well, the VDMA said that the strong demand that “still pervaded the industry in 2010 and the first quarter of 2011 has come to a halt for the time being”.
“But it’s too early to say whether this downturn in new orders is actually indicating an end to recovery and pointing to a turnaround,” says Sebastian Popp, VDMA’s economic expert in construction equipment and building material machinery. The strong fluctuations in demand are still requiring companies to be highly flexible in their production with mastering this them coming close to their limits.”
Manufacturers of road construction equipment reported the greatest growth in demand although manufacturers are therefore expecting weaker growth for 2012. Growth markets include China and India as well as the US and the Middle East.