The Road Ahead: A brighter tomorrow for the MT industry

Dr Hans-Martin Schneeberger, President of CECIMO, stated in his opening remarks that the global and European manufacturing industry continue to recover, highlighting a positive business climate that brings long-awaited optimism for the market.

While 2020 saw a significant decline in the world output of machine tools from 75.3 billion euros to 60.1 billion euros (-20%), CECIMO countries were even more affected by this downturn, with their overall volume dropping to 20.2 billion euros (-26%). However, CECIMO maintained its leading position on the global MT market, with a 34% share in 2020.

Alongside the strong growth in European industrial output and the business climate reaching record positive levels in 2021, the European Machine Tool Industry is on the path to recovery. The President of CECIMO, Dr Schneeberger highlighted: “I believe that EMO Milan 2021 will stimulate investments and that it will have an impact on the growth of the various sectors of European and global industry.”

New orders in the first half of 2021 improved significantly compared to the same period last year. The average domestic orders index in the first half of this year was 98% higher, while the average foreign orders index was 63% higher compared to the same period last year. Moreover, according to recent forecasts, significant growth of CECIMO’s total orders is expected in the second half of this year.

This year, the CECIMO MT production is expected to grow at an annual rate of around 9.4%, to hit 22 billion euro. Given that the global MT growth is predicted to be faster (+14.1%), CECIMO’s share in the global MT output is forecasted to be around 32%. Based on data for 2020, Germany remains our major exporter (with share of 40.4%) along the other CECIMO members, shortly followed by Italy (17.7%) and Switzerland (11.2%). It is important to note that the aggregate output of these three countries also represents over two thirds of the total CECIMO output. “The latest data are reassuring showing us that our sector is on the right path to becoming stronger, and more adaptable than ever before. In that regard, the figures point out the rising confidence in our sector’s ability to recover”, highlights Dr Schneeberger.

Based on data for the first half of 2021, CECIMO countries recorded a 14% increase in total exports over the same period last year. Like in previous years, the two most important export destinations for European MT builders remain China and the United States. In China, in the first half of 2021, European MT Builders exported 4% more Machine tools than in the same period last year. Over the same period, exports to the United States also improved significantly, with growth of approximately 21%. On the other hand, the CECIMO countries also recorded an increase in total imports by around 8% during the same period. Among the two main supplying markets for CECIMO countries, imports from Japan decreased by 11%, while imports from China increased by 26%, compared to the first half of 2020. Trade activity is expected to increase in the second half of the year, while CECIMO’s trade balance is expected to remain strongly positive.

On the demand side, a positive scenario is expected for European Machine Tool builders. According to the latest forecasts from Oxford Economics for 2021, European consumption of MT is expected to reach approximately €16.1 billion. After a forecasted growth of 9.4% in 2021, 14.6% in 2022 and 6.1% in 2023, MT consumption in Europe is predicted to be near 2019 levels by 2023. With a 14.1% increase, global MT consumption is expected to surpass 62 billion euros in 2021 and reach 2019 levels with a 11.1% increase in 2022. While all major MT purchasing sectors show positive investment growth rates, the highest growth rates in 2022 are anticipated in the “Aerospace” and “Motor vehicle and parts” sectors.

However, numerous challenges for the MT sector still exist and should not be ignored. Amongst the most impactful ones, we count the uncertain political climate, supply chain disruptions, materials and components shortages and rising prices. Also, the uncertainty around the Delta variant continues to affect the global business climate and, of course, international trade.

Overall, the outlook for the coming period is positive, and to point out the importance of MT builders for the global industry growth, Mr Marcus Burton, the Chairman of CECIMO’s Economic Committee emphasised during the EMO Press conference that: “The products of our Machine Tool builders drive other industries. All industries and countries will need to invest in Machine Tools to improve productivity and to support international efforts to tackle climate change. We are here today to show the strength of our Industry and our latest technologies to achieve these objectives”.