Development of the Machine Tool Building Industry

International Development

The global machine tools market only had modest growth in the year 2014 according to the information from the German Machine Tool Builders‘ Association (VDW). World consumption rose by 2.9% to € 60.7 billion (previous year: € 59.0 billion). The cause of this is largely an exchange rate effect in Japan and increased production figures in China.

Asia recorded growth of 5.4% (previous year: – 20.2%). In North and South America, the development in the year 2014 was likewise negative at – 5.8% (previous year – 11.5%). In the USA the cosumption was stable (+ 0.1%). The demand for machine tools in Europe rose by 4.1% (previous year: + 1.1%).

Despite a stagnate consumption, most machine tools were once again consumed in China in 2014 (+ 0.3%). At a volume of € 19.4 billion, China had a share of 32% in the world consumption (previous year: € 19.3 billion). We estimate our relevant market share to be € 6.8 billion. The second most important market for machines tools in 2014 was the USA with a stable consumption of € 6.1 billion (previous year: € 6.1 billion; + 0.1%). In the third largest market, Germany, consumption rose in the reporting period by 1.7% to € 5.6 billion.

The strongest growth market in the year 2014, Japan, ranks fourth with a consumption of € 4.4 billion (previous year: € 3.0 billion, + 48.9%). This value is strongly distorted by currency fluctuations in the reporting year as well as previous year. As in the previous year, South Korea ranked fifth with € 3.7 billion (previous year: € 3.3 billion, + 11.1%). The ten most important consumer markets accounted for 77% of world machine tool consumption in the reporting period; the following diagram presents an overview:

Worldwide consumption of machine tools* in %**

The VDW also calculated a rise in global production of 2.9% or € 1.7 billion to € 60.7 billion (previous year: € 59.0 billion). The world’s biggest producer of machine tools in 2014 was China with a volume of € 12.7 billion – the equivalent of 21% of machine tools produced worldwide (previous year: € 13.3 billion, – 4.1%). In Japan the production reached € 11.0 billion (previous year: € 9.1 billion, + 21.0%) or 18% of global production. Germany at € 10.8 billion (previous year: € 11.1 billion, – 3.5%) was once again the third largest producer; this equates to 18% of world production. The ten most important production countries represent a total of 91% of all machine tools (previous year: 91%). In the major markets, the production shares developed as follows:

Worldwide production of machine tools* in %**

German Machine Tool Industry

The ifo business climate index for trade and industry is the leading indicator for economic development in Germany. According to its survey, the main consumer industries (mechanical engineering, automotive manufacturing and electrical engineering) reported index values slightly below the previous year level. This reflects the presently uncertain economic situation.

In 2014, the German machine tool industry recorded declining sales revenues, but a stable production and increasing order intake. At € 14.8 billion, the order intake of plants in Germany remained with a rise of 4% above the level of the previous year (€ 14.2 billion). At the same time, domestic demand rose by 6% (previous year: – 7.0%), demand from abroad rose by 4% (previous year: – 6.0%). The VDW reports that order intake for cutting machines rose by 4% (previous year: – 8.0%). In the forming machines segment, order intake rose by 5% (previous year: – 2%). Order intake at foreign plants of German manufacturers is not included in this figure.

Due to export restrictions, sales revenues of German machine tool manufacturers fell by – 5% compared to the previous year (previous year: + 7%).

Over the course of the year, order intake at plants in Germany developed as follows:

Machine tool order intake in germany per quarter* real changes against the previous year in %

The production of machines reached a volume of € 13.2 billion and therby € 0.2 billion below the previous year’s level.

Machines with a value of € 9.1 billion were exported (previous year: € 9.2 billion), exports thus fell by 1% compared to the previous year; the export ratio reached 69% (previous year: 68%). The most important export market for German machines tools was once again China at € 2.3 billion (previous year: € 2.3 billion); this represents 25% of German machine tool exports (previous year: 25%). The USA took second place with an export volume of € 0.9 billion (previous year: € 0.9 million; export share: 10%). Russia was the third most important export market, to which machines valued at € 0.5 billion were supplied (previous year: € 0.5 billion; export share: 5%). The development and composition of German machine tool production is shown in the following multiple year comparison:

German machine tool production in € billion

Imports of machine tools rose by € 0.2 billion or 6% to € 3.1 billion (previous year: € 2.9 billion). Accounting for an import share of 30%, every third imported machine tool came from Switzerland, followed by Japan (11%) and Italy (9%) also ranking among the top 3.

Domestic consumption of machines and spare parts reached € 7.2 billion, as in the previous year.

Over the course of the year, the capacity utilisation of German machine tool producers fell. The capacity utilisation of producers of cutting machines was 90.1% (previous year: 92.8%).

The extent of the order backlog again fell slightly over the course of the year. It was an average of 7.3 months (previous year: 7.5 months). The extent of order backlog is based on calculations and represents an average figure for the industry. The total number of employees in German machine tool companies rose on an annual average in total to 71,617 (previous year: 71,383).

Reliable statements on the profitability of the German machine tool industry are difficult to make as only a few companies publish the corresponding figures. Therefore, the industry’s association has to rely on estimates.