Global machinery market rose 38 percent in 2010

ERJ staff report (EPN)

Frankfurt, Germany -- The value of production of German producers of “core” plastics and rubber machinery increased by 28.9 percent in 2010 from 3,811 million euros (US$5,519 million) in 2009 to 4,911 million euros (US$7,112 million) in 2010.

However, lower growth in non-core machinery - including printing and auxiliary equipment and tooling - brought down overall growth to 18.3 percent, with a production value of 7,460 million euros (US$10,804 million).

The 2010 data was revealed on June 9 by the German Plastics and Rubber Machinery Association (VDMA).

In addition to releasing its final-year 2010 results, VDMA also released global data on sales and consumption of plastics and rubber machinery.

VDMA estimates that world production of core plastics and rubber machinery grew 38.1 percent in 2010 to a value of 23.347 million euros (US$33,812 million). China is notable here for having overtaken Germany as the largest producer in 2009, the gap having meanwhile widened further with Chinese producers accounting for 29.3 percent of world production, compared with 21 percent for German producers.

Both Italian (9.6 percent) and US (5.4 percent) producers have also lost market share in 2010, but Japanese producers managed to increase their share of world production from 4.1 percent in 2009 to 5.4 percent in 2010.

But although the value of Chinese production has almost doubled from 3,820 million euros (US$5,532 million) in 2009 to 6,840 million euros (US$9,906 million) in 2010, only 21.9 percent has gone to exports, compared with 67.5 percent for German producers.

China therefore remains, as in 2009, as the top export market for German producers with a value of 587 million euros (US$850.1 million) in 2010 accounting for a 17.7 percent share of German core plastics and rubber machinery exports.

VDMA managing director Thorsten Kühmann pointed out “Japan had been the largest supplier to China in the past, but this status changed in 2009. Today, 20 VDMA member companies, 10 percent of overall membership, also produce in China.”

This was illustrated in a complex trade flow graph, in which Japan had supplied plastics and rubber machinery worth 240.2 million euros (US$347.8 million) to China in 2001, when German supplied China to a value of 161.7 million euros (US$234.2 million).

Meanwhile, in 2010, German producers have reached 587.2 million euros (US$850.4 million), slightly above the 577.6 million euro (US$836.5 million) level for Japanese suppliers. During the 2001-2010 period, Chinese exports increased rapidly in percentage terms, but at a low level. Currently China exports 85.2 million euros (US$123.4 million) in machinery to Japan and 37.8 million euros (US$54.7 million) to Germany.

The comparable China-to-USA data for 2010 was 34.2 million euros (US$49.5 million), the USA-to-China data was 98.4 million euros (US$142.5 million).

The association's president Ulrich Reifenhäuser expressed concern however: “What happens if Chinese processors do not have such strong demand as now? There could be efforts then by Chinese machinery producers to fill production capacity. With the Chinese already selling in the world market, it could be dramatic.”

For now, however, Reifenhäuser remains relaxed, “as although Chinese machines cost some 15-20 percent less than German ones, they generally have lower quality and are less reliable.”

Looking in more depth at sales of Germany-made machinery, VDMA said the US market retains second place for German machinery producers with sales of 228 million euros (US$330.2 million). But India has replaced Russia in third place.

French and Italian markets were almost level pegging in fifth and sixth positions.

Turkey made a big leap however from 17th to seventh place, as did Brazil, jumping from 16th to eighth place. Poland and Mexico were close together in ninth and 10th positions with each around 95 million euros (US$137.6 million).

Strongest growth in production value by type of machinery was taken by injection moulding machines, up 57 percent in 2010 to a value of 638 million euros (US$924 million), the sector exporting 93 percent of overall production value.

Blow moulding machines did next best with 35.4 percent growth to 373 million euros (US$540.2 million). Extrusion machinery did slightly less well with production value up 30.9 percent to 912 million euros (US$ 1,321 million).

Thermoforming machinery accounted for 155 million euros (US$224.5 million), up 30 percent.

Commenting on the data, VDMA president Ulrich Reifenhäuser referred to recovery having taken place on a broad front, with it having meanwhile also reached customers in Western Europe and the USA. Having shown ability to handle strong fluctuations in the economy and thereby now having reached average 88 percent capacity utilisation, German plastics and rubber machinery producers are now investing in production expansion, he added.

Despite the good results and continuing growth forecast, Reifenhäuser said that there is concern about vulnerability to crises in financial markets and short-term fluctuation in the value of the Euro currency, as well as uncertainty about its long-term direction.

He added however “it is good we have the southern European Eurozone countries with debt problems, as it means an exchange rate benefit, ensuring that German machinery remains competitive”.

Increasing energy and raw material costs are also of concern, as they have direct production cost effects on machinery producers, as well as indirectly influencing ability of plastics processing customers to invest in machinery by depressing profit margins and thereby cutting potential return on investment.

Here, KraussMaffei Chairman Dietmar Straub confirmed “we will see prices increases and delivery times will lengthen. This is not pleasant for our customers, but to be expected. The price of rolled steel is increasing. We have a lot of steel in our machines, so it has to lead to higher prices.”

On the effects of the Fukushima crisis in Japan, Peter Steinbeck, joint managing director at blown film machinery producer Windmöller & Hölscher, said there has been no sign of electronic equipment shortages and that W&H even has a customer in Fukushima district that has started producing again. On the other hand, Straub said “some people are buying electronic equipment in Europe instead of Japan and that affects supply.”

Steinbeck also advised that although food and hygiene markets for film have held up well, there has been holding back of investment during the financial crisis and that this no longer applies.

Michael Baumeister, COO technology and logistics at oriented film machinery producer Brückner Maschinenbau, said machinery demand for packaging applications has been particularly good in India and China. But there is also strong interest in equipment needed to produce backing sheets for photovoltaic panel applications, as well for film for optical applications.

From Europan Plastics News (A Crain publication)

Website