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VDMA Foundry Machinery: Sector growing in a challenging environment

Dr. Timo Würz

Sales up almost five percent in 2013
Frankfurt, 23 May 2014 – The foundry machinery sector continues to maintain the high sales level reached following the crisis. In 2013, average growth in the sector was five percent. However, the production volume in Germany was five percent lower last year than in 2012, reaching a figure slightly over €1 billion. “Foundry machinery manufacturers could not expect more dynamic growth in 2013 in view of the recession in some parts of Europe, otherwise sluggish developments and growing competition in key export markets, especially in China,” said Dr. Timo Würz, Managing Director of the VDMA Foundry Machinery specialist association, in Frankfurt on Thursday. “However, the continued upward trend shows that the sector is mastering the complex challenges of internationalisation.”

Outlook for 2014: confidence despite headwind
In view of developments in key customer sectors, especially automobile production, the threshold to double-digit growth may once again be crossed in 2014. Respondents to the Foundry Machinery specialist association survey on the economic situation expect average sales growth of eight to ten percent in the current year despite the many challenges faced – from exchange rate shifts through financing questions to the consistent development of the metallurgy machinery industry in China. At the end of last year, there were already signs that the slump in orders received by the foundry machinery sector may be coming to an end. On average, there was still a slight fall in new orders received in 2013 compared with the previous year. However, more orders than in 2012 were recorded from the Eurozone (up 14 percent) and other countries outside Europe (up 18 percent). Since the beginning of the year, German customers have been providing an additional boost, with orders for the first quarter of 2014 up 50 percent on the value for the corresponding period of the previous year.

Upward trend in business climate indices of customer sectors
In order to assess developments in the near future, it is essential to take a look at the business climate in the sectors of industry which are the main customers for foundry products. For example the ifo business climate index for the machinery industry showed a slight positive trend at the end of the year. At 84 percent, capacity utilization is still slightly below the long-term trend. The situation at German foundries is similar. There has been a significant improvement in the ifo indices in the fields of automobile and automobile component production and metal production and processing since autumn 2013. The equipment investment forecasts of the EU commission indicate further business potential, with predicted growth of almost six percent in Italy and Spain and more than seven percent in Poland. In addition, the sales successes of German automobile producers on the Chinese market could lead to growing exports and additional local investments.

Slight growth in German exports despite fall in world trade in 2013
On the basis of export data from the five largest supplier countries (Japan, China, Italy, Germany and the USA), it is estimated that there was a fall of about five percent in world trade. Following a fall in 2012, exports by German foundry machinery suppliers once again rose (by four percent). German export figures calculated on the basis of customs statistics indicate exports totalling €145 million* in 2013. Exports from China grew by 19 percent, while there was a decline in exports from Italy (down 13 percent), Japan (down 13 percent) and the USA (down 19 percent).

Especially German deliveries to China grew at an above-average rate of 17 percent. There were also positive developments in exports to European countries such as Poland, Spain and Italy. In 2013, exports to Russia were about a quarter below the figure for the previous year, representing six percent of total exports by the sector. In the three months from December 2013 to February 2014, German exports to the EU member states grew by 36 percent compared with the corresponding period of the previous year. All in all, exports to European countries therefore accounted for about half of German exports during this period and for 40 percent on average for the year as a whole. German deliveries to the USA also developed positively at the beginning of 2014.

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