German Machine Tool Industry Witnesses a Halt in Declining Orders in Q1 2023

Frankfurt am Main, Germany – The German machine tool industry’s orders received in the first quarter of 2023 were 11 percent down in nominal terms from the same period last year. Orders from Germany declined by 18 percent, whereas those from abroad fell by 8 percent. Overall, this represents a decline of 17 percent in real terms. “However, given the many financial burdens—such as the energy crisis, high inflation, increased interest rates, and the overall weakness of the economy—it is encouraging to note that the latest figures from March show a halt in the downward trend in orders,” says Dr Wilfried Schäfer, Executive Director, German Machine Tool Builders’ Association (VDW), commenting on the results. “Orders from abroad are proving much more stable than those from the domestic market. Impetus is coming in particular from the non-euro countries, where large-scale orders are playing an important role,” he notes.

“Overall, we are seeing a decline in the difficulties which our industry has had to contend with,” Schäfer explains. China has ended its zero-COVID policy. Supply chain tensions are now beginning to ease. This is allowing key customer sectors, such as the automotive industry, to produce more again. This had suffered above all from the lack of microchips. As a result, sales picked up again in the first quarter. The increase of 20 percent, or 11 percent in real terms, reflects the positive factors.

Regardless of the current economic situation, numerous developments are leading to raised levels of investment: the ongoing trend toward automation, increasing digitalization, booming electromobility, the build-up of capacity in the critical infrastructure triad (e.g., chips, batteries), extensive investment in climate protection (e.g., heat pumps), the expansion of renewable energy sources, and rising defense spending.

“We are expecting orders to stabilize in the second half of the year,” concludes Schäfer. “A major advantage right now is the ongoing and sizable backlog of orders stretching ahead almost twelve months. According to the latest forecast, this will enable production to grow by the same amount in 2023 as in the previous year, i.e., a 10 percent increase to €15.5 billion.”

Image Source: German Machine Tool Builders’ Association (VDW)


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