Trade disputes between the world's major economic powers, punitive tariffs and other trade barriers continue to cause uncertainty. Added to this is the uncertainty surrounding Brexit. All of this is causing economic momentum at home and abroad to slow. At the same time, the willingness to invest is declining. This is now also having an impact on the mechanical engineering sector in Germany. According to the VDMA, the existing order backlog of 8.5 months on average is still buffering production in the first few months of the current year, but the association lowered its growth forecast from September 2018 from +2% in real terms to +1% at its press conference at the Hannover Messe 2019.

Carl Martin Welcker, VDMA President © VDMA

Exports and free market access are of great importance for the mechanical engineering industry in Germany. In 2018, the industry achieved an export ratio of almost 79%; exports increased by 4% in real terms to around 178 billion euros in the same period compared to 2017. Total turnover in the mechanical engineering sector increased by 1.3% to 232.5 billion euros, while production grew by 2.1% in real terms. VDMA President Carl Martin Welcker on the developments: "We had originally forecast an increase in production of 5 percent for 2018, but material shortages and staff shortages prevented such growth. In addition, many companies were reluctant to build up the capacities required for higher production due to the growing uncertainties and risks."

VDMA calls for streamlined free trade agreement with the USA

The trade disputes between the largest single markets, the USA and China, are a thorn in the side of the association. "We hope that the situation will de-escalate soon," says Welcker. The same also applies to the still smouldering trade disputes between the USA and the European Union. Europe must find strategic answers to the US President's attempt to enforce American law with the help of extra-territorial sanctions all over the world. During the press conference, the VDMA urged the EU to issue negotiating mandates for a lean free trade agreement with the USA and not to wait until after the European elections.

The association sees it as positive at European and German level that industrial policy and the necessary support for industry in global competition are being discussed again. The digital transformation in particular has long received little attention in Brussels and Berlin. However, there is criticism of political considerations to regulate and steer industry more strongly and to favor certain technologies. Welcker warned: "We need market economy principles and an openness to technology. The state is not the better entrepreneur or engineer."