“Turning point reached” for German machinery sales, says VDMA

Trade association, VDMA, says the “turning point has been reached” for the 10-year growth of sales for the German plastics and rubber machinery sector. 

The VDMA is forecasting a decline of up to 10 percent in turnover for 2019, following a slump in sales in the first quarter, which it expects to continue for the remainder of the year. 

2018 results

In 2018, German plastics and rubber machinery manufacturers did achieve an overall increase in turnover of two percent compared to the previous year, however, this was less than the three per cent predicted. 

“The growth rate of three per cent originally predicted for 2018 could not be reached,” explained Ulrich Reifenhäuser, Chairman of VDMA Plastics and Rubber Machinery. 

“Nevertheless, we are pleased about the positive all-year results as in particular towards the end of the year, deterioration of the market became already apparent.”

In terms of orders, 2018 saw a drop of one per cent in orders for German plastics and rubber machinery manufacturers compared with a year earlier. 

The VDMA says it “is obvious that 2019 cannot achieve the good results of the previous year.”

In the first quarter of 2019, the sector booked 10 per cent fewer orders than in the same quarter a year earlier. For this reason, VDMA expects the aforementioned decline in turnover of at least 10 per cent. 

Automotive, trade wars and economic instability

The reasons for the slump come as the industry faces great challenges as a result of negatively influencing factors. 

Firstly, there is the cyclical downturn which was due after ten years of growth. This downturn, says VDMA, is greatly reinforced by insecurity presently prevailing in the automotive sector. 

"Investments are virtually at a standstill," explained Thorsten Kühmann, Managing Director of the Association. 

"Companies that are very close to this sales market already perceive this downturn even more intensely. But also, in the packaging sector, use of plastics materials is increasingly being questioned," Kühmann added. "In this sector, the bad image of plastics today has a major impact." 

Furthermore, the latent trade conflict between the US and China is causing shifts in supply chains and insecurity in markets all over the world. In Europe, there are uncertainties due to the continued unclear situation regarding the UK’s exit from the EU as well as Italy's immense national debt. 

China is most important export market, closely followed by the US 

In 2018, the top position of Germany's major export countries was again held by China where plastics and rubber machinery valued at 853 million EUR (approx. £760million GBP), an increase of 19 per cent, was exported from Germany. 

VDMA says this is a record for the number of machines exported to one single country from Germany. Additionally, apart from exports, half a million euros worth of plastics and rubber machinery were manufactured in the country. This, it says, makes China by far the most important overall market. 

After holding the top position for three years, the US now ranks second in the list of major export countries. With an overall export value of 820 million EUR, three per cent fewer plastics and rubber machines were exported to the US than in 2017. 

You can access the VDMA's full 2018 report and outlook here