On track for continued growth: business involving new machines increases

by SCHOLPP

The Commerzbank report and the German Mechanical Engineering Industry Association (VDMA) forecast positive outlooks for German machine manufacturers. At the end of 2017, both institutes predicted that business within the sector should see a three percent increase in total revenue in 2018. Both Commerzbank and VDMA are basing these optimistic expectations on the economic situation in Germany and in the rest of the world, which remains positive. Investment activities are also expected to pick up. Medium-sized enterprises and smaller machine manufacturers in particular need new business models, in order to continue to survive in the competitive global environment. SCHOLPP can support companies in this respect with its comprehensive service for machine installations.

The market in Germany

With ten percent of the global market, Germany is the third-largest mechanical engineering sales market in the world (China: 38 percent, USA: 14 percent). Financial experts and industry experts alike expect a further expansion in 2018. An additional driver behind the sales of new machines and plants will be the high utilization of production capacities, which has been at a record high since 2008. Capacity bottlenecks are already coming to light in some sectors, which the VDMA sees as a sign of the need for investments in equipment. “The number of orders for new installations has seen a clear increase. For many medium-sized businesses, SCHOLPP acts as an external installer in new business transactions,” stated Steffen Kühn, Managing Director of the SCHOLPP Group, confirming this trend.

SCHOLPP customers rely on CSM – Complete Service Management. This involves a sophisticated standard for specific cooperation between machine manufacturer and industrial service provider. “Service modules can be combined in a flexible and modular fashion for each specific order: consultation, transport, move-in services, installation, and establishment of production readiness,” explained Managing Director Steffen Kühn. The installation teams receive special training for the individual machines. SCHOLPP also provides long-term support for servicing and maintenance of the installed machines – both nationally and internationally.

The international market

Another aspect seen as a positive signal is the fact that China and other emerging markets, such as Russia, Brazil, and India, are further expanding their industrial sectors. However, German companies also need to take note of the increased competition in the mid-tech sector, primarily from machine manufacturers in East Asia. The best way for German machine manufacturers to defend their share of the market is to rely on their advanced expertise while further improving their cost-effectiveness. The experts at Commerzbank believe that involvement in this sector is definitely worthwhile.

According to them, there has been an upward trend in the economy in the USA and in the EU since the beginning of 2017, and the VDMA also believes that there is a backlog of necessary investments in the EU. Risks for the business of German machine manufacturers could arise from protectionist tendencies in the USA, the currently unforeseeable consequences of Brexit, and the neighboring crisis regions such as Syria and Eastern Ukraine. In 2017, the export share for German manufacturers was over 60 percent. A full 47 percent of all machines and plants are delivered to EU countries, 10 percent to the USA, and 9 percent to China.

According to the VDMA industry association, locations abroad are becoming increasingly important. “SCHOLPP provides services to support the international strategy of its machine manufacturer customers and to help with the delivery of new plants and with after sales service. We act as a trade partner on location for medium-sized businesses that do not have a location of their own in a particular region abroad,” added Managing Director Steffen Kühn. As part of this cooperation, the machine and plant manufacturers benefit from the network of locations in the SCHOLPP Group in Germany, Europe, and Asia. Proximity to the customer and important target markets is a guarantee for successful business.

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The Commerzbank report and the German Mechanical Engineering Industry Association (VDMA) forecast positive outlooks for German machine manufacturers.