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Gerhard Hein of German Machine Tool Builders’ Association
Date Published：4/27/2017 02:04:05 PM
Ladies and gentlemen,
May I welcome you most cordially to the VDW’s press conference to mark the CIMT 2017 in Beijing. My name is Gerhard Hein, and here I am representing the German Machine Tool Builders’ Association, the VDW, as well as the official German participation at the CIMT. We are highly gratified to see that you have accepted our invitation, and are interested not only in the fair as such, but also in German firms that are operating in China. Three senior managers from front-ranking companies here at my side exemplify a multitude of German manufacturers who are represented in China with their own subsidiaries, sales operations, service and/or production facilities.
At the CIMT 2017, from 17 to 22 April, around 200 German firms will be showcasing their corporate capabilities, partly exhibiting in the official shared German participation (the German Pavilion), which is supported by the German Federal Ministry for Economic Affairs and Energy, partly showing presence on their own account (German Group). In all, they are occupying more than 8,000 m² of net exhibition space, and thus constitute the largest grouping of foreign exhibitors at the fair. This shows the strong commitment of German manufacturers to China as their most important export destination. They see their role not only as vendors, but also as partners for expanding and modernising China’s industrial sector. This applies in particular to the government’s activities within the framework of the “Made in China 2025” strategy. Against the background of the associated thrust for quality, not only globally operating large corporations will be well advised to take advantage of German expertise: smaller and medium sized companies can benefit immensely as well.
Bilateral machine tool business now in calmer waters
The high double-figure growth rates in Germany’s bilateral machine tool business with China are history for the time being. Since their all-time high in 2012, German exports have fallen by more than a quarter, to around 1.9 billion euros last year. Nonetheless, China remains the most important sales market for German manufacturers. For modernising China’s industrial sector, high-tech machines “Made in Germany” are indispensable. More than a quarter are being imported from Germany. Among the broad technology mix that German manufacturers supply to China, machining centres were by far the most popular category last year.
Business between Germany and China is not a one-way street, however. German purchases totalled 137 million euros in 2016. Compared to the preceding year, imports thus remained almost unchanged. There is particularly strong demand for parts and accessories.
A look at the order bookings indicates that the decline appears to have bottomed out, and that German-Chinese machine tool business is regaining momentum. Order bookings from China rose by more than a quarter in 2016.
China’s economy developing more cautiously
For the current year, the British economic research institute Oxford Economics, the VDW’s forecasting partner, is once again predicting a slowdown in the Chinese economy: for all important indicators, from general economic performance, industrial production output and capital investment, all the way through to machine tool consumption, lower growth than in the preceding year is anticipated. One major determinant factor in bilateral machine tool business is machine tool consumption, which is predicted to rise by 3.9 per cent in 2017.
Whereas worldwide machine tool consumption, according to the VDW’s own global statistics, fell by three per cent in 2016, China, with 21.7 billion euros, once again took first place, reporting an underproportional minus of one per cent when calculated in euros. This means the Chinese market remains almost three times as large as the US or German markets, which with a fall of two and an increase of four per cent respectively follow in second and third place. Among the top markets, double-figure growth was achieved by Italy, India and Japan.
German machine tool industry cautiously optimistic for 2017
Ladies and gentlemen, now for some remarks on the situation of our sector in Germany. It began 2017 in optimistic mood, and expects production output to increase by three per cent.
This assessment is based on international industrial production output, and global demand for machine tools, which according to Oxford Economics are both set to rise. The forecast is also supported by the substantial order backlog from 2016. In all, orders placed with German manufacturers rose by seven per cent, driven by orders from abroad. Domestic orders remained at their high level of the preceding year. Overall, the German machine tool industry is benefiting primarily from high-volume project business worldwide, driven significantly by the automotive industry.
2016 another record year for production output
The VDW’s forecast builds on the record year of 2016, with a production volume of 15.1 billion euros. Given an export ratio of 67 per cent, exports fell by two per cent to their present approximately 9.2 billion euros. This is attributable to the marked fall in demand in China during 2015.
During 2016, an average of 69,000 men and women were employed in the German machine tool industry. Capacity utilisation in Germany maintained the preceding year’s level, averaging 88 per cent. The order backlog, at 6.9 months, was slightly up on the figure for 2015.
German manufacturers are export world champions again
In the context of international competition, too, German machine tool manufacturers continue to perform excellently: in 2016, despite a slight fall, they became export world champions in front of Japan, with a volume of 7.6 billion euros, excluding parts and accessories. Japan, the preceding year’s champion, suffered severe losses of almost a fifth, dropping to 6.6 billion euros. The reasons behind this slump in the Japanese figures are the tight concentration on multi-purpose technology and the weakness of the broad markets important for this category in Asia.
In terms of production output, too, Germany ranks among the world’s best: with around 11.2 billion euros, we took second place behind China, the undisputed front-runner with 17.2 billion euros. Japan lost eight per cent, and takes third place with around 11 billion euros.
Industry 4.0 offers abundant opportunities
2017 is characterised by numerous challenges, which offer opportunities for generating new competitive advantages. This is particularly true in the field of digitally networked production and the solutions available for Industry 4.0. There are very significant potentials in complete-coverage automation of the entire order handling workflow and the remedying of process malfunctions. High increases in efficiency, in the double-figure percentage range, are most definitely conceivable using comprehensively networked solutions and will help customers to stay ahead of their competitors. The basic preconditions here are the acquisition and analysis of machinery and process data. To make this possible, we need flexible IT infrastructure, from the machine to the cloud, that’s affordable even for relatively small manufacturing companies. There are still some obstacles to be overcome in this context: they include unresolved or not-yet-harmonised issues of networking in production operations, such as interface standardisation, data security, data sovereignty, liability issues, staff skilling, labour legislation, and much more.
EMO Hannover 2017 will focus on “Connecting systems for intelligent production”
Many new ideas and innovations for the production operations of tomorrow will be on show at the EMO Hannover 2017. Following a four-year break, the world’s premier trade fair for the metalworking sector will be held once again in Hanover from 18 to 23 September 2017, under the motto of “Connecting systems for intelligent production”. Six months before the fair begins, the EMO Hannover 2017 is on course for record figures: around 2,000 firms from 42 different countries on more than 160,000 square metres of net exhibition space have so far registered for the event. 135 companies from the People’s Republic of China have so far committed themselves to taking part. The gratifying response of exhibitors shows that over the long decades of its existence the EMO Hannover has evolved into the world’s most important innovation platform.
汉诺威国际机床工具展 – VDW expands EMO communication with Chinese customers
Since February 2017, the VDW has been operating an EMO Hannover 2017 account on the Chinese social media channel WeChat. It is being supported here by the German agency Storymaker, which is very active in China and works for some Chinese subsidiaries of German manufacturers. Chinese users of machine tools, and other interested parties, can find out more at 汉诺威国际机床工具展 online about the EMO Hannover and its special features. The focus here is on trends in the international machine tool industry, exhibitors and products at the EMO Hannover, interesting fringe events for Chinese visitors, news about the preparation for the EMO, tips for travel and accommodation, the tour programme at the fair, Chinese delegations, and much more. We are currently conducting a small survey on the topics of the EMO Hannover 2017, technical advances in the Chinese machine tool industry and the development of electro-mobility in China. You are cordially invited to take part and provide your own input.
Summary: in good shape for the future
So it can safely be said that the German machine tool industry is in good shape to meet and master the tasks of the future. It is working intensively on weather-proofing its capabilities for the storms of global competition. The vast majority of German machine tool manufacturers are well equipped to face the challenges ahead, are represented worldwide with service, sales and production facilities, and are continuing to expand and upgrade their structures abroad. Global demand for machine tools is rising, and German manufacturers are at the forefront. They are able to meet this demand, and are benefiting directly from it. The firms are integrating new technologies into their products, and developing new solutions. In future, too, they will be up with the leaders in the premier league.
Three representatives of front-ranking German manufacturers are sitting at the table with me here today, and will now be reporting on their activities in the Chinese market.
On that note, I thank you most sincerely for your attention!