It’s not easy to understand where the market is going, both in steel sector and in machine-tools sector.
It’s not easy also to identify what will be the impact of the new EU Government that has come out from the ballot boxes and which will be the future for EU Manufacturers as players in the global market.
Duty tariffs, trades with USA, internal difficulties in EU, first of all Brexit, short time to European Elections: here you are some of the main topics for international industrial situation. Forecast are telling us of a unstable market, with big uncertainty in machine tools production and some threats on global economy that need to be faced and solved as soon as possible, but they are still waiting to be scheduled as the solution is not so easy to find out or as there other topics under the spotlight, such as, for instance, European Election or Brexit.
As you can read in CECIMO’s report on third quarter of 2018 “The EU economy is entering its sixth year of uninterrupted growth. But the rebound of global growth, driven by stronger-than-ever trade in 2017, is wearing off amid greater trade tensions and an economic outlook clouded by domestic and interrelated external risks. Both the European Commission and the European Central Bank (ECB) have signalled that the European economy has moved down a gear. Robust domestic fundamentals should support some economic activity. The ECB finally announced the end of its quantitative easing policy. But investment will still benefit from favourable financing conditions, despite the upcoming normalisation of the monetary policy.In the third quarter, demand for machine tools is usually lower. But, this year, the drop appears to be sharper, due to the real economy context. GDP growth weakened, partially reflecting production bottlenecks in the car manufacturing sector. Inflation picked up in the third quarter but is moderating towards the end of the year. In the near term, growth is projected to recover”.
In this issue of the magazine we face some of the main topics of the moment, from the duties, especially on Chinese steel, with contribution of the President ad one Member of European Parliament, and the difficulties in trading with United States, first of all in automotive sector.
In this issue, moreover, we also try to tell the story of a triangle: a triangle of passion and, maybe, betrayal, with a rosy end for a couple of lovers and a bitter fate for a dreamer husband: that is the story of Tauring that fell in love with Pedrazzoli but had to surrender to CML International that succeeded in difficult endeavor to tear off the great company based in Bassano to the arms of Tauring Group that now is serving the consequences of the loss.
In this issue, furthermore, you can read the presentation of Made in Steel, the growing exhibition that will be held in Milan in May for the second edition in a row, after growing in Bergamo for several years.
You will find also an interesting article dedicated to Marcegaglia and many news from the companies, in a complete landscape of the last innovation in the market and technology.
I also want to underline the role of our new website, where you can find the articles of this issue translated in Italian, updates and photograph from the world of Tubes.
And we came to the end of 2018, finally. A year rich of challenges, starting from the widespread of the Industry 4.0 bedrocks in all sectors of machine tools building and application, to the research of new markets and slowdown of previously fast growing economies. A year, indeed, that leaves still unsolved the majority of the challenges: following Industry 4.0 and other innovation, such as Artificial Intelligence applications, means investments and re-thinking of the industrial process; reaching new markets, with other strong investments, could be difficult for many companies, already worn out by the difficulties of economies growing with slow rates, or showing signals of unexpected decrease.
Nevertheless, 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%. Hence, the growth of the sector is generally strong, even if there are many differences from one country to the other and the weak rates of resumption in some leading countries in the sector are penalizing the companies based there. It is the case of Italy, where the strong industrial tissue, build up almost exclusively by SMEs is facing the threat of stagnation after not so many years of growth at a
small pace. Moreover, weak global trade might affect foreign demand and slow down European machine tool market growth. And yet, the technological development is one of the biggest in years: Industry 4.0 is a real industrial revolution and more innovation is still to come in many fields, from additive manufacturing to Artificial Intelligence, from circular economy to data analysis and storage. For instance, by applying AI to industrial data, some startups are minimizing machines’ downtime. One of them, Uptake, is trying to collect and analyze data that at the moment are available but still not considered, to prevent machine stops and decrease downtime: no need to add more sensors or to change process, every data needed to make possible early alarm that prevent system failure are already monitored and stored, it is only matter to analyze them in the correct way. This is an innovation that can strongly improve productivity, but needs testing, development and experimentation before being affordable and easy to use, in a word needs investment. And the same can be told for many other technologies that are already handy. In 2019, during many shows all over the world, these topics will be central: we are at the beginning of a period of enormous and fundamental changes, first of all in the sector of machine tools.
On the other side, the need of restrictive environmental policies is forcing companies in re-evaluating their processes and their productive standards. Who will be in grade to keep up with all this innovation: the matter is if only biggest companies will do.
The economic situation is quite unstable: on one side, deceleration of economic growth in the Eurozone is more and more sensible, on the other side the same uncertainty on the future of UE the same, are generating instability and fears in stock exchanges and then, as a consequence, in all industrial sectors.
The growth of politic groups which sustain anti-UE ideologies are surely worrying such as the continuous contrasts among members state. Orders dropped only mildly in the first quarter, but current levels are 10% higher compared to the same period last year. Quarterly trade indicators scored lower than in the previous quarter – dragged down by the strong Euro and disputes over tariffs. In spite of this, we exported 10% more than in the first quarter of 2017. As a matter of fact, imports from the Americas plummeted by -95% over the year.
The EU and US have agreed to work towards a close-to-zero tariff policy. Overall, managers in the machine Tool sector remain optimistic about the third quarter. Concerning Far East, economic growth in the region is projected to lose some traction. Q2’s positive export growth performance in the region did not reflect a renewed momentum in global trade but rather the front-loading of production and shipping ahead of the implementation of trade tariffs between China and the United States on 6 July. Moreover, investment dynamics worsened in the region as
economic weaknesses in key global players, including China and the European Union, and mounting geopolitical risks weighed on investor sentiment. This was demonstrated by the broad deterioration of the region’s manufacturing PMI readings in July. Along with trade war risks and slowing global growth, the recent
selloff in emerging markets has led most currencies in the region to depreciate and poses additional risks to East-and South-Asia’s economic outlook. While the impact has been broadly limited for now, with the notable exception of Pakistan, more episodes of capital outflows could seriously hit the region’s financial markets
and put additional strain on the countries’ external positions.
In USA, Economic growth is strengthening to about 3% largely due to a substantial fiscal boost. Employment growth remains robust which, coupled with buoyant asset prices and strong consumer confidence, is sustaining income and consumption growth. Business investment is projected to strengthen as a result of major tax reform and supportive financial conditions. A pick-up in the world economy is underpinning export growth, although tensions have emerged on how best to reduce barriers to trade. Fiscal policy is set to loosen substantially. As spending appropriations are determined, they should prioritise boosting the productive capacity of the economy, such as by supporting infrastructure investment. Fiscal policy combined with structural policies can also help those on the margins of the labour force into employment. As macroeconomic policy rebalances, the
projected gradual withdrawal of monetary accommodation is needed to ensure that inflation returns to target and inflation expectations rise to their historical norms. Heightened risks in the non-financial corporate sector have emerged. It is a confused moment, in which it is difficult to foresee what will be, even in short term. Political instability in Middle East or in Northern Africa, the choices of Turkey in Syrian scenario, the variables of Mid-term election in USA and European elections in next May will make uncertainty even worse.
We live in a period that is quite difficult to understand, when contrasting signal are surging, from rising economies to politic uncertainty, from positive growth to fear for decrease and stagnation. Positive long-lasting trends of past decades are, indeed, matter of past, now we are forced to work with orders for one month maximum: programming is not so easy for company, what reduces margins that are already low. The best solution is cooperation and widen markets and area of interest, that could not be easy for small companies, but is almost possibile, following the model of many companies based in Far East, taking into consideration the differences between the two productive tissues.
(sources: oecd and cecimo surveys and forecasts)
A strong growth in European machine tool production and an industrial strenght that finally pushes beyond Germany cause a raise in forecast for 2018 revenues and global industrial output: according to CECIMO, EU machine tool’s builders association, total net revenue in 2018 will be between 27.8 and 28.3 billion euros, at least 3.4 billion euros more than expected in last November. Demand for capital equipment is at record-high levels and we have been seeing clear signs of sustained global manufacturing momentum at the beginning of 2018, you can read on the CECIMO’s statement. Companies rely heavily on exports of machine tools to other regions (China and the U.S., in particular) and it noted that “increasing foreign orders point to a continuous improvement in machine tool exports in 2018.
CECIMO endorsed the EC proposal as “a positive step towards the creation of an open environment to stimulate investments in AI and keep the EU at the forefront.”
The group also supported the EU initiative to increase investments in AI research and innovation by at least €20 billion through 2020. “We need a systematic approach to innovation, research policy and investments in AI, in order to boost the EU’s technological and industrial capacity across the economy,” it stated.
“The machine tool sector is going through a rapid digital transformation. The industry is developing and investing in new business models together with customers. For manufacturers to ‘future-proof’ their factories, technology, processes and people should be equipped and empowered to face the upcoming challenges and stay ahead of the competition,” stated CECIMO director general Filip Geerts.
So, a particularly favourable environment is growing, even if everyone can see some signals of stormy weather at the horizon: one the first hand, the research on addittive manufacturing versus the new resolution of European Parliament above 3D printing, where it is important that Europe has recognised the importance of new processes in manufacturing, but otherwise industry needs a stronger differentiation in legal framework among b-2-b and b-2-c uses of technolgy. On the second hand, European economy is always in trepidation for custom duties announced by US President Donald Trump on European products. If it is true that American industries do not own the neccessary know how to be independent in machine tools sector, it is true at the same level that a change in global market axes can allow US factories to obtain machineries also from Far East producers, that is unexpected and was unpredictable only few months ago. Only to have a brief summary on US market in machine tools, we can resume few data: in USA, machine tool orders surged in May, posting solid gains on a monthly and year-over-year basis. Orders totaled $485.49 million in May, the Association for Manufacturing Technology (AMT; McLean, VA) said in a monthly report. That represented a 22% gain from an adjusted $396.67 million in April and a 38% increase from $351.79 million in May 2017. For the first five months of 2018, orders totaled $2.13 billion, a 26% increase from $1.69 billion for the same period last year.
For us it is a period of great changes: new articles and columns in the magazine, new profiles on social media (look for us on LinkedIn, for instance), a new website periodically updated. It is a deep effort to follow the new opportunities in communication, even in a field conservative like mechanics. Also the choice of create two different issues of the magazine, in Italian and English, is the evidence of a international vocation that we are trying to enhance and pursue.
Stay tuned, more to come in an autumn of main exhibitions, from Bimu, to Euroblech and Fabtech.
