In the third quarter of 2019, incoming orders in the German machine tool industry fell by 25% compared to the same period of the previous year. Domestic orders fell by 29%. Foreign orders fell by 23%. In the first nine months of 2019, incoming orders fell by 23%. Domestic orders were down by 22% and foreign orders by 23%.

"Demand for machine tools continues to decline, although the downturn has slowed somewhat at the current margin," comments Dr. Wilfried Schäfer, Executive Director of the VDW (German Machine Tool Builders' Association). Never before has the sector been confronted with such an accumulation of factors, all of which had a negative impact on business: a cyclical downturn coupled with trade conflicts and the unstable state of the largest customer, the automotive industry.

Compared to the summer months, however, the volume of metal-cutting machines, which account for around 70% of total production, has recently recovered somewhat at the current margin. "We are definitely seeing an initialEMO effect here," says Schäfer. However, it remains to be seen whether this can be consolidated in the coming months. Orders actually turned positive again in September. The foreign project business in particular had a supporting effect.

Overall, the euro countries are giving cause for concern, with orders falling by well over 30% in all three months of the third quarter. Oxford Economics, the VDW's forecasting partner, does not expect an effective recovery in demand from Europe for the year as a whole either. The scientists are also concerned about business in Asia. As the stimulus provided by US fiscal policy comes to an end, America will also become more difficult. Overall, the international economic climate has deteriorated considerably and is causing a reluctance to invest, even if the mood is brightening slightly at the very end, according to Schäfer.

2019 production forecast revised
Against this backdrop, the VDW has withdrawn its production forecast for 2019. "The targeted moderate decline in production can no longer be maintained in view of the high decline in orders in the current year," the VDW Executive Director continues. The association is now assuming a decline of 4 percent, which will be supported by the realization of the order backlog. However, the gradual stabilization in demand expected in the summer for the second half of the year has not been confirmed. Capacity utilization recently fell to 86.9% in October after 87.9% three months previously.

Dr. Wilfried Schäfer, Managing Director of the VDW.

"The real problem is foreseeable for 2020 due to dwindling stock orders," says Schäfer. It will hardly be possible to build up a significant buffer in the current year. The anticipated recovery in demand in 2020 will also be very moderate after the sharp fall. This is also reflected in the forecasts for international machine tool consumption. With a decline of a good 4 percent in the current year, the best case scenario is still described here - as a moderate baseline scenario. The calculation of the rates of change in national currencies also has a stabilizing effect. as