Signs of an upturn in the European machine tool industry

Machine Tool Orders turned around in the fourth quarter of 2009 in CECIMO countries (Germany, Italy, Switzerland, Spain, France, United Kingdom, Austria, Belgium, Czech Republic, Denmark, Finland, Netherlands, Portugal, Sweden and Turkey), after dropping by over 50% in the first quarter of 2009 (in comparison with the same period one year before) as a consequence of the financial crisis. CECIMO president Michael Hauser (pictured), explained that "since order backlogs are still very low, it will take a few more weeks before the turnaround is clearly observed in sales". Recovery in the European machine tool industry was being driven by an increased consumption in the emerging markets, and notably from China. Despite the severe crisis in the sector in 2009, the global market share of machine tools exported from CECIMO countries rose from 55% to 61%. This proved the competitiveness of the European sector in global markets. CECIMO expects this trend to continue in 2010. It would, however, take more time for European consumption to recover, since capital investment in the traditional end-user industries was still low, capacity utilisation was below average and credit was still difficult to get, especially for the smallest companies. The current financial instability associated with the sovereign debts of some European countries may also hinder the necessary cash flow that is required by industry to invest in modern and energy efficient production equipment. The geographical shift of the machine tool consumption toward the emerging markets of Asia and Latin America made it therefore necessary for the European machine tool industry to obtain fair and non-discriminatory access to those markets. "The economic crisis has unfortunately led to a revival of some national reflexes, demonstrated by a surge in small-scale national initiatives which are often more of a hindrance than a help to boosting the economy" said Frank Brinken, chairman of CECIMO's economic committee. Such obstacles (like the recently introduced machine import regulations in South Korea) often took the form of additional costly local certification, or of some significant delays in getting import or export licences. Free trade agreements, such as the EU-South Korea agreement, were expected to eliminate such non-tariff barriers. CECIMO was therefore a strong proponent of this agreement. Even though CECIMO understood the mitigated position of some sectors regarding the duty drawback and the safeguard clauses, the organisation requested that the European council accepted a provisional implementation of the FTA before the European Parliament gives its final agreement.