"These three developments were largely responsible for the fact that incoming orders and production in 2019 slipped significantly below the previous year's level," said VDMA President Carl Martin Welcker at the association's annual press conference in Frankfurt.

Production in the German mechanical engineering sector fell by 1.8% in real terms in the first ten months of the year compared to the previous year, while incoming orders fell by 9% in the same period. At 83.9%, capacity utilization in October was below the long-term average of 86.2%. "Our industry is not in crisis, but many of our customers are unsettled and are currently postponing or stopping their investments. We will therefore probably close 2019 with a 2% drop in production to around EUR 218 billion," said Welcker.

Good employment situation comes under pressure

The good employment situation in the German mechanical engineering sector could therefore
come under pressure. In September 2019, there were a total of 1.073 million
employees in companies with more than 50 employees, up 0.6% on the previous year. This means that mechanical engineering remains the largest industrial employer in Germany and is also the most important engineering employer. A record number of 200,000 engineers were recently employed in the mechanical engineering sector. "Every third company, 35% to be exact, is now complaining about a lack of orders," said Welcker.

USA outstrips China in the export rankings

Exports by mechanical engineering companies from Germany increased in the first nine
months of 2019 by a nominal 0.6 percent compared to the previous year to 134.6
billion euros. The USA remained the most important sales market (up 6.2
percent to 15 billion euros). In contrast, business with China (second place) shrank by 0.7% to 14.1 billion euros.

This reflected the consequences of weaker domestic growth in the
Republic and the trade war with the United States. Exports to the
exports to the USA, on the other hand, were still able to benefit from the impetus
corporate tax reform there, although VDMA economists expect US growth to be less dynamic in 2020.

The repeatedly postponed Brexit decision is now also having a clear impact, with exports to the UK falling by 4.8% to just under 5.7 billion euros. As a result, the country slipped to sixth place in the rankings. In the first nine months of the year, mechanical engineering companies from Germany exported goods worth 64.6 billion euros to the European Union's neighboring countries - an increase of 1.1 percent compared to the previous year.