Incoming orders 2020
VDMA: Good start, no all-clear
According to the VDMA, the mechanical engineering sector in Germany got off to a surprisingly good start to the year. In January, incoming orders increased by seven percent in real terms compared to the previous year.
"Unfortunately, this is not a sign of a sustained economic recovery. The increase is mainly due to a few large orders that came onto the books in January. We must also expect the effects of the corona crisis to be clearly reflected in the order figures in the upcoming reporting months," said VDMA Chief Economist Dr. Ralph Wiechers.
Orders from Germany had a particularly positive impact in January (up eleven percent), but mechanical engineering companies also received eight percent more orders from non-euro countries. In contrast, orders from euro partner countries were down four percent. Overall, foreign orders increased by 5 percent at the beginning of the year.
Coronavirus and supply chains
The production losses in China due to the coronavirus are also likely to cause losses in the German mechanical engineering sector, according to the association. China is not only the second most important buyer of German mechanical engineering products. In 2019, the People's Republic was also Germany's most important foreign supplier of machines, but above all of components and parts. "We must expect restrictions along the supply chains from China to Germany," is the expectation of the VDMA Chief Economist.
In a recent analysis, VDMA economists came to the conclusion that around a quarter of all intermediate inputs in German mechanical engineering come from abroad. The Chinese share of value added alone is likely to have reached around 3 to 4 percent by now. "This may seem low at first glance. However, the global value chains are closely interlinked. If individual key components, such as a highly specific control unit manufactured in China, are missing, there will be a serious disruption to the production process unless other suppliers can step in. Ultimately, this can mean that a machine cannot be delivered to the customer," explained Wiechers. as
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