According to the VDMA, the mechanical engineering industry in Germany must continue to prepare itself for considerable burdens. The trade dispute between the USA and China and growing protectionism around the world have not left the mechanical engineering export champion unscathed. Added to this are the global economic downturn, Brexit and structural change in key customer groups. "All of these factors are already having a concrete impact on numerous customers of our machines and systems worldwide and are generally unsettling investors, who are therefore holding back on investments. There is no sign of a sustainable change for the better in the near future. We therefore expect a real decline in production of 2% in the mechanical engineering sector in 2020," says VDMA Chief Economist Dr. Ralph Wiechers. The production forecast for the current year - also down 2% on the previous year - is confirmed by the VDMA economists.

In Germany, the situation and outlook in industry has recently deteriorated further and the investment climate - particularly in the automotive industry - has suffered noticeably. And abroad, too, there is no expansionary impetus in important mechanical engineering sales markets. Even in the USA, investment momentum has slowed significantly and there are increasing signs that American industry is also suffering from the trade dispute with China. In the People's Republic, on the other hand, the effects of the tariff war are being felt more and more clearly, leading to stagnating and in some cases even declining sales in notable industrial sectors in addition to already weakening growth.

The outlook for machinery deliveries to the EU, the largest sales market, is also mixed. Many countries are suffering from the trade dispute between the USA and China due to their close trade relations. Added to this is the ongoing uncertainty as to when and how the UK's exit from the EU will take place. "As if that wasn't enough, the industry is having to cope with losses in important emerging markets. Whether in Russia, Turkey, Iran, Mexico or Argentina - business in these high-yield markets is increasingly being made politically difficult for us," says Wiechers.

Orders last for 8.4 months

The downturn for mechanical engineering companies is being cushioned by a still good order backlog of 8.4 months (July 2019). Capacity utilization (86.6%) has thus far been maintained, albeit just above the long-term average. The number of people employed in Germany (companies with more than 50 employees) remains high at 1.064 million. Real production is now slightly down; in the first seven months of the current year, it fell by 0.9% compared to the previous year. "While the first quarter of 2019 saw an increase of 0.3%, production in the second quarter fell by 2.9% compared to the previous year," explains Wiechers.