During its General Assembly in Barcelona, CECIMO reported that its machine tool production is likely to see an 8% gain in 2018. The turnover of CECIMO manufacturers should reach €27.8 billion, continuing its extraordinary growth for the second year in a row and increasing our global market share from 33% to 34%. Nevertheless, weak global trade might affect foreign demand and slow down European machine tool market growth. On the policy side, the General Assembly debated the contribution of the machine tool sector to the circular economy and its prominent role in the shift towards sustainable manufacturing. The General Assembly discussed the European Commission’s ambitious targets for CO2 emission standards, calling for an evidenced based and well-balanced EU Regulation which takes into account the technological and economic challenges.
Economic situation and outlook
Industrial growth in 2017 was its highest rate in the last three years, supported by robust global trade. As growth reached its peak, industrial activity also began to slow down. We expect a slowdown of industrial growth from 3.6% in 2018 to 3.2% in 2019. Solid economic fundamentals and capacity constraints will support further growth. Although the mood in Europe and US has recovered, we do not expect any future improvement in the economic sentiment. Leading indicators also point to an eventual slow down, but not in the US.
Estimates for 2018 suggest an 8% increase in CECIMO production, slightly steeper than the 7% registered last year. We are expecting to reach a production volume of €27.8 billion. Global MT production should grow at a slower rate, by approximatively 3.6% and reach €81.9 billion. The global output of MT purchasing industries should rise by 5% this year, but decelerate to 3.1% in 2019.
CECIMO trade looks good for 2018. US tariffs were directed over the Pacific rather than the Atlantic when it comes to our sector. In the first semester, we saw a 10% increase in exports of CECIMO-based companies. Estimates suggest that our export volume will reach €21.3 billion (6.7% higher than in 2017). Based on 2018 data, the main destination markets for our machines will remain: China (27% of extra-CECIMO exports), the US (18%), Poland (8%) and Mexico (5%).
Based on internal figures, we expect CECIMO machine tool consumption to rise to €18.2 billion in 2018, which is 10.6% higher than last year. Our colleagues from Oxford Economics are slightly more optimistic and predict a 13.9% increase in 2018 and 4.8% in 2019 for CECIMO. World consumption is expected to increase by 5.2% in 2018 and 3.8% in 2019.
Although trade disputes do not directly affect the machine tool sector, they impact business confidence and economic sentiment. Mr Marcus Burton, the Chairman of the Economic Committee, asserts that “we need a strong global trade and investment impetus to support foreign demand and further growth for the European manufacturing sector. That implies having a cooperative attitude on a Brexit deal, transatlantic tariff disputes and fiscal stimuli from the national governments”.
Contribution of the machine tool sector to the circular economy
The shift towards a circular economy calls for a prominent role for manufacturing. Machine tools are at the core of manufacturing and therefore they also have a role to play in the shift towards a more sustainable sector. In this context, CECIMO delegates discussed how the sector is already contributing to the circular economy through different actions aiming at improving the performance of its products, developing new, cleaner technologies and embedding sustainability principles into everyday operations. “Maintaining, refurbishing, continuous improvement and upgrading and recycling are already common practices in the sector” said Juha Mäkitalo, Chairman of the CECIMO Technical Committee. “We should not be complacent, though. We need to continue building on the good work done by the sector to meet increasing demands for more energy and resource-efficient products”, he added.
CECIMO is currently preparing a report on the contribution of the machine tool sector to the circular economy – including recommendations for policymakers and industry – to be published in early 2019. One of the key recommendations for policymakers, which is especially relevant to the current discussion on the new European research programme, is to support the development of new enabling technologies and to facilitate the access to research and development funds for manufacturing (and particularly SMEs). Investing in R&D is essential to retain the competitiveness of machine tool companies and to develop new, cleaner and more efficient technologies. It is important to promote the development of new technologies such as Additive Manufacturing, Artificial Intelligence and Machine Learning, which can enable the transition to a more circular economy. Among the main recommendations to the machine tool sector itself is the need to showcase best practices from the circular economy and real-life success stories from the sector. Included is also the need to work more closely with customers and suppliers to improve product efficiency, remove waste from the supply chain and create new and more circular business models and products which create added value for customers.
Creating the right framework conditions for investment in cleaner cars and innovation
The transition to low-emission transport has been on the top of the EU political Agenda for some time, with the EU Institutions setting ambitious targets for CO2 emission standards for new passenger cars and light commercial vehicles. CECIMO organised a panel debate at its General Assembly to discuss how to achieve the transition to low-emission transport without negatively impacting Europe’s mobility and competitiveness.
Addressing the panel, Member of the European Parliament Francesc Gambús explained that “We cannot make steps forward to sustainable growth if we do not balance our environmental, social and economic aspects in every policy". "We need to guarantee neutrality in technology to achieve the targets of reduction set globally in our environmental legislation”. Roberto Vavassori, President of the European Association of Automotive Suppliers (CLEPA) stated: “It is imperative to maintain European leadership in our mobility industry at a worldwide level, thanks to technology neutrality and competitive EU regulation”. He added “When discussing the future emission standards, fact-based assessment of the current status and future potential is essential; taking into account environmental, social and economic priorities”.
Also contributing to the panel, CECIMO President Dr Roland Feichtl said: “Political decisions in favour or against specific technologies have a detrimental impact on the EU’s competitive position and the prosperity of our society. Our sector can contribute to emission reductions with machine tools to produce CECIMO - conventional powertrains and electric cars. Nevertheless, we should be cautious when making decisions that entail geopolitical risks and could affect our competitiveness in relation to other areas of the world such as China and the US” stated Dr Roland Feichtl, CECIMO’s President.
Filip Geerts, CECIMO Director General called for “a gradual shift to low-carbon mobility. To this end, EU Regulation needs to stimulate innovation and allow proper lead time for industry to bring technological improvements in the internal combustion engine”.