(Photo: Linck / VDMA)
After ten long years of growth, the sales boom for the woodworking machinery industry will come to an end this year, said Germany’s Mechanical Engineering Industry Association (VDMA). In addition to the economic slowdown already indicated in 2019, the COVID-19 pandemic will act as a significant brake.
By September 2020, there are around 20% fewer orders on the books than in the previous year. “The pandemic has put an additional damper on customer industries that were also previously in an economic downturn. However, we are also observing that some customer segments such as the craft trades, the sawmill industry and processors in the construction-related sector are still investing in times of the Corona crisis,” explained Pekka Paasivaara, Chairman of the German Woodworking Machinery Association, at the virtual general meeting.
The COVID-19 pandemic alone offers considerable potential for uncertainty regarding future economic development. In addition to this, there are the incalculable risks of the approaching brexit, as well as increasing trade restrictions, which are causing problems for export-oriented mechanical engineering. In total, the trade association is expecting a 15 percent drop in production in the current year.
“In addition to the significant drop in orders, travel restrictions – such as to China – continue to hurt the industry. We only get our fitters and service technicians to the customer with a delay. This also contributes to the reduction in sales,” continued Paasivaara.
For 2021, the trade association expects a slight recovery with a plus of 3%, despite all the limitations that must be made at present to make a forecast meaningful. The level will thus remain significantly below that of previous years.
“We expect the current situation to stabilise,” said Paasivaara. “A substantial improvement is not expected in the foreseeable future. But there is reason to hope that we have passed the low point. The number of enquiries with concrete investment plans from customers has now risen significantly again, but uncertainty continues to slow down many decisions.”
Foreign trade with losses
In the first eight months of the current year, the export value of German manufacturers of woodworking machines fell by 15% year-on-year to EUR1.3 billion. Among the top ten export destinations, only Austria, Brazil and Lithuania were able to increase their exports. In the case of the latter two, the increase resulted from deliveries of individual large-scale plants. The two most important individual markets, China and the US, suffered above-average losses of 18 and 42% respectively. There are currently encouraging signs for the Chinese market. This will have a positive effect on export values in the coming months.
In the same period, German imports decreased by 7% to EUR360 million. Of the most important supplier countries, only China was able to increase its imports by 11% to EUR114 million.
In the current challenging times, further investments are being made in future viability, with a high number of cooperations and participations in companies and start-ups dealing with the diverse topic of digitisation. And in the VDMA, too, networked manufacturing is the focus of cooperation between companies in the various working groups. OPC-UA as the world language of production is being driven forward at full speed, as is the digitized exchange of data between tools and machines.
Even if climate change is not currently at the top of the political agenda, the topic will pick up speed again.
“It is a breakthrough for our customer industries and thus also for us machine builders that the construction and material wood is now receiving the recognition it deserves at all political levels. The positive contribution that wood as a renewable raw material can make to reducing the CO2 footprint, especially in the area of sustainable construction, is enormous. As an equipment supplier, the woodworking machinery industry will do its utmost to promote this topic. So we can look ahead with optimism,” Paasivaara concluded.