According to preliminary figures from the VDW, the Europeans were ahead of the foreign markets. They increased their orders by 90%, followed by America with growth of66% and Asia with an increase of 61%. China and the USA remain the two largest markets and the most important customers with high double-digit growth ratesof65% and 92% respectively . In the list of the top 20, all countries increased their demand by at least double digits, some even by triple digits. Orders from Italy, Austria, the Czech Republic, Switzerland and India were particularly strong. Italy and Austria benefited from government subsidies .

According to forecasting partner Oxford Economics ,global gross domestic product is set to grow by 4.2% in2022 , industrial production by 4.4% and investments by 4.3%.Europe, our largest customer, leads the triad in terms of investment growth."We can benefit from this, as the order books of many customers are well filled,"said Bernhard, adding thatsome of the data for Germany waseven better .After weaker development in the previous year, German industry is now picking up. The two leading indicators, Ifo business climate and purchasing managers' index, arealso pointing upwards .

"Nevertheless, the 2022 forecast is still characterized by uncertainty,"admitted Bernhard. In view of the huge numbers of infections with theOmikron variant,Oxford Economics fears that many people will go into self-isolation, not travel and thus inhibit economic life .Experience shows that the economy quickly regains momentum when infection numbers fall. However, the weak start to the year is a burden on the overall result. China's declared no-Covid strategyis also making it more difficult to normalize supply chains .

Recovery faster than expected in2021

After thedeep slump in themachine tool industry due to the pandemic in 2020,the sectorgot back on track last yearwithgood orders . According to VDW estimates, it produced machines and services worth around 12.7 billion euros in2021 .This corresponds to an increase of 4%.

Business was driven by exports, which grew by 8%, twice as much as production.America led foreign business with a plus of 13%, followed by Asia with a plus of 11% and Europe at the bottom with a plus of 5%. Among the ten largest markets , the Czech Republic, Italy, Mexico, China and the Netherlands recorded double-digit growth. China recovered after a sharp decline in 2020.

In contrast, domestic sales fell by 5%due to the automotive industry's reluctance to invest .The only slight increase in consumption of 1% was supported by imports, which rose by more than a tenth.Capacity utilization was87.2% in January 2022 compared to 72.7% a year earlier. With 64,000 employees, employment in December was down 6.1% on the previous year.

The biggest challenges are supply bottlenecks and a shortage of skilled workers

"Bottlenecks in the supply chains for electronic components and metal products were thedominant issue for the industry last year, and they are still ongoing,"reported Bernhard. According to a survey ,they had reachedalmost all manufacturers in the machine tool industry bythe end of 2021 .

The chip shortage in particular is affecting companies in two ways. On theone hand, the supply capability of the automotive industry , an important customer ,is limited .On the other hand, there is a lack of chips for control systems, one of the most important components in machine tools, as well as for gateways, edge computers and drives. This is delaying the delivery of ordered machines.

Thecauses ofthe chip shortage started with declining orders at the beginning of the coronavirus pandemic,which led to the shutdown of capacities and the detour of deliveries to the consumer goods industry .Production capacities fornew chip generationstake time, andfreight space is also limited due to airport and port closures in China as part of the country's strict zero Covid and lockdown policy ."This could escalate again at any time,"warned Bernhard. For some time now,the increased demand for some products has been puttingadditional pressure onsuppliers toprotect themselves.

The machine tool industryhas very limited short-term influence and compensation options .The changeover to a new generation of chips takestime because development costs of several man-years canquickly arise."For the time being, the only option is to be highly creative when procuring materials and to accept higher prices that may not be able to be passed on,"says the VDW Chairman. In the medium term, itwill become increasingly important to establish stable supply chains and diversify the number of suppliers in order toreduce dependencies .

Proactively strengthening the image of dual vocational training

Almost all machinetool companiessee the shortage of skilled workers as being just as serious as thesupplybottlenecks. According to a survey, over two thirds ofmanufacturers want to increase their core workforce this year.In contrast, the number of vacanciesin the mechanical engineeringsector inDecember 2021 was around twice as high as at the end of 2020. The number of applicants for training positions and the number of training contracts concluded are also declining

The availability of skilled workersis an indispensable prerequisite for competitiveness in the highly specialized machine tool industry."Andqualified specialists require qualified training," said Bernhard.He called on companiesand politicians alike to proactively emphasize the attractiveness of vocational training .It offers just as manyopportunities asan academic career .Companies should emphasizetheir attractiveness and offergood training and special support if necessary . Apprentices shouldalsoberetained by the company after their training through further training opportunities, promotion prospects and appropriate salarydevelopment. Politicians ,for their part ,must also emphasizethe importance of vocational training and support industrial-technical vocational schools, which can also be a regional economic factor. They are also role models becausethey are often better equipped technologically than other types of school. In order tofurther promotedigitalization,manymore vocational schools must be granted independent budgeting, which allows them to invest on their own responsibility ."Dual vocational training is an export hit that we must not jeopardize ,"demandedBernhard.

Energy transition offers potential for the machine tool industry

With the announced energy transition, the focus isalso shifting to the restructuring of the energy industry .The VDW is currentlycommissioning the Munich-based consultancy Strategy Engineers to investigatethe potentialforthe machine tool industry. The study is currently being finalized and will be presented to VDW members in the second half of March.

Most majorindustrializedcountrieshave developed ambitious strategies to reduceCO2 emissions.The energy sector is a key factor here, as it currently accounts for 25% of emissions. The central building blocks are the expansion of low-emission energies, the expansion of the electricity grid and the development of a hydrogen economy."All in all, the transition to emission-free energy sources is a mammoth global task that will require trillions of euros to be invested worldwide every year,"said Bernhard .

Due to low production volumes and long service lives ,the energy industryhas not beena focus for machinetoolmanufacturersto date. However, the higher investments arenow leading to increasing quantities ofmechanical components for wind turbines (e.g. gearboxes, tracking systems and large bearings) However, higher investments are now leading to increasing quantities of mechanical components for wind turbines (e.g.gearboxes, tracking systems and large bearings), combustion engines with relevance for the energy transition (gas turbines), comprehensivemechanical peripheral components, for example in the area of heat pumps for heating houses (generators, compressors)and, in the future, components for hydrogen production (electrolysis) and application in mobile and stationary fuel cells (fuel cell system with stack as well as the so-calledbalance-of-plant with compressors, valves, pumps, etc.).

"How large the volume will be in the individual areas depends on the speed of the transformation," concluded Bernhard. So far, there have been many declarations of intent. Politiciansmust now create reliable framework conditions for the transformation so that companiescan also reorient themselvesif they see opportunities here.