Global machine tool consumption growth remains strong in 2019

Dr. Schaefer, General Manager of the German Machine Tool Manufacturers Association, Hannover Metalworking World, said at the Hannover Metalworking World Press Conference held in China in March 2019, “The global economy has not achieved the dynamic growth of the previous year. After years of dynamic growth, slowing growth has created opportunities for global companies to focus on strategic issues again and make decisions for future investments.” Hanover Metalworking World is an ideal platform in 2019. The upcoming Global Metalworking Exhibition will be based on the theme of “Intelligent Technology Drives Future Production!”, sharing information on modern production technology, network and digital future production solutions, and new services combined with traditional processing technologies.

EMO Hannover 2019 press conference site

Although economic data is expected to be lower than the results of 2017/2018, it still shows strong growth. This is due to the rapid development of Asia (GDP growth of 4.5%), followed by the Americas (2.4% GDP growth) and Europe (GDP growth 1.6%). However, in terms of capital expenditures and machine tool consumption, Europe has taken the lead, growing by 3.8% and 4.7% respectively. Especially in Eastern Europe, consumption is expected to increase significantly. Hungary, Poland, the Czech Republic and Slovakia remain successful industrial zones that are well developed and attract investment. Europe's largest market, the birthplace of Hannover's metal processing world - Germany's economy is booming but growth is slightly slow. It is expected that in 2019, German machine tool consumption will once again achieve strong growth, up 3%.

Dr. Schaefer, General Manager of the German Machine Tool Manufacturers Association

Machine tool consumption growth rates in Asia and the Americas are 3.3% and 3%, respectively, so Asia will be the second largest international customer next year. Among them, small Asian countries such as Vietnam and Indonesia have higher growth rates, and machine consumption in the Indian subcontinent is far above average. But in terms of China's largest market, China, machine consumption has maintained a modest level of growth across Asia and will continue to exert strong influence over the next few years. In addition, despite the slowdown in the government's tax cuts and attractive depreciation policy conditions, US demand for machine tools in 2019 remains high.

In the world's nine largest customer industries, the investment in the precision machinery and optics industry, the automotive industry, the electrical engineering/electronics industry including power generation, the aircraft industry and other transportation industries (especially rail transport and shipbuilding) are above average.

Dr. Schaefer said, “Now look at the state of the machine tool industry in Germany, the host country of Hannover Metalworking.” Both production and exports in 2018 set new records. According to estimates, the industry has produced machinery and services worth more than 17 billion euros, with an export rate of about 68%.

Dr. Gu Qiao, Member of the Board of Directors of Hannover Messe, Germany

Still, the long-term rise will end here. Orders in 2018 increased slightly by 1%, and there were signs of a significant slowdown in the fourth quarter. On the one hand, the global economic development momentum has diminished, and markets outside the euro zone have fallen into deficits. On the other hand, the holding of Hannover's metal processing world in the second half of 2017 boosted domestic demand. The particularly strong demand in these months puts very high demands on the 2018 total order target. It has been proved by practice that until the end of 2018, the number of orders has not exceeded, but negative growth has been achieved, in line with expectations. Finally, with the expansion of trade conflicts, global protectionism has risen, oil prices have risen, various emerging markets have fallen into a high inflation predicament, and the scale of uncontrolled expansion of debt has been frequent. The current global situation is disturbing, especially for small and medium-sized enterprises.

Despite this, the number of employees exceeds the historical record, growing to 75,000; by the end of 2018, almost all employees can make full use of their talents, with a utilization rate of 93.7%. Dr. Schaefer said, “The machine capacity utilization and supplier parts supply show that the economic slowdown has reduced the pressure on the company and employees, and created a space for thinking, which is easy to set the necessary route in the future. Challenges, such as automation and industry 4.0 that have changed manufacturing processes and jobs, the company recommends smart investment plans, such as the Hanover Metalworking World in 2019."

China's economic slowdown

After a high growth rate in recent years, China’s economy has slowed down and its growth rate has stabilized at a normal level, which is a single-digit growth. This is not a special case. Other Asian countries, such as Japan and South Korea, have had similar experiences. The Chinese government has taken measures to deal with these changes. For example, reducing infrastructure investment and improving the debt situation of local authorities. At the same time, set restrictions on financing programs, and regulate speculation in the real estate market. According to the assessment of the German Federal Foreign Trade and Investment Agency (GTAI), all of this indicates that the importance of capital investment is gradually decreasing, which is necessary for development. On the other hand, the government supports consumption through tax cuts. Consumption has always been a reliable pillar of economic development.

According to the Oxford Economic Research Institute, China's GDP this year is expected to grow by 6.1%, and Asia's growth of 4.5%. Industrial production increased at a small rate, with a growth rate of 4.6%. Investment in the eight most important machine tool customer industries is expected to increase by 3.5%. The growth of the aircraft industry, other means of transport (such as railways and ships), the automotive industry and mechanical engineering is particularly evident, and the proportion of investment has increased significantly. In the world market and domestic regions, modern production technology is an important factor in improving the competitiveness of Chinese industry. China is the largest machine tool producer. However, China's machine tool consumption is three-quarters higher than domestic production. This data is an important indicator for the implementation of modernization goals in the industry. Oxford economists expect China's machine tool consumption to grow by 3.3% in 2019 compared to the previous year's increase in machine tool consumption (7%).

In 2018, the value of Chinese machinery imports reached about 8 billion euros, making the country the world's largest importer. Germany is its second largest supplier, accounting for about a quarter of its imports. In 2018, German machine tool exports to China increased by 6%, about 2.3 billion euros. Orders mainly cover machining centers, grinding machines, lathes, and parts and accessories.

Dr. Schaefer said, “However, the Sino-German machine tool business is by no means a one-way street.” About 4% of German imported machinery comes from China. China is one of Germany's top ten suppliers, accounting for more than 4% and sales of about 170 million euros. In 2018, Germany’s imports from China increased by 23%.

Therefore, the Hanover Metalworking World places great emphasis on Chinese manufacturers and professional audiences. As of mid-February this year, 160 Chinese companies have completed the registration of the exhibition. Compared with the 2017 show, this year's increase of 40%. Among them, Zhuzhou Diamond Cutting Tool Co., Ltd., Jinan Bond CNC Equipment Co., Ltd., Zhangzhou Aoketai Tools Technology Co., Ltd., Beijing Jingdiao Group, Dongguan Purui Miller Machine Tool Co., Ltd. have confirmed their presence.

Dr. Schaefer concluded, “All in all, the economic environment of Hannover Metalworking in 2019 will certainly create excellent business opportunities for Chinese audiences.” Therefore, we recommend that Chinese machine tool users can actively participate in the Hannover metal processing world in 2019 to optimize future investment. decision making. According to China's industrial import statistics, nearly 1,000 manufacturers of China's three major suppliers and regions - Japan, Germany and Taiwan, completed the Hannover Metal Processing World registration in mid-February. Dr. Schaefer said, “This means that many important business partners will be present at the show.” In 2017, more than 3,300 Chinese product experts went to Hannover to participate in the event. Dr. Schaefer concluded, “This is the largest participating team outside Europe.”

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