The manufacturers of construction equipment and building materials plants in the VDMA fear a drop in sales at the turn of the year. The industry is currently living off orders from last year.
Frankfurt am Main, July 21, 2023 – For the current year, VDMA members expect a new sales record with a forecast real growth of up to ten percent. The ability to deliver has improved due to the fact that more components are available to manufacturers, was the general conclusion at the board meeting of the trade association VDMA Construction – Equipment and Plant Engineering on 14 July 2023. Orders from the past thus ensure the necessary capacity utilisation. However, the order backlog is now gradually decreasing because far fewer new orders are coming in. In the period from January to May 2023, construction machinery already recorded a total decline of 19 percent in new orders and building materials plants a decline of 23 percent. In Western Europe alone, orders are down by up to 50 percent – especially for building construction machinery. Especially in residential construction, the economic downturn due to higher interest rates is having a strong impact – in Europe, but also in North America – and is not bypassing the machinery suppliers. From the fourth quarter of 2023 onwards, they must therefore be prepared for a noticeable decline in turnover if the order intake situation does not improve.
Lack of competitiveness
Worldwide, the competitiveness of companies with production in Europe is limited by excessive bureaucracy with over-regulation and the accompanying documentation requirements, such as the Supply Chain Sourcing Obligations Act. “The limits of what is feasible have been reached here,” emphasised Franz-Josef Paus, chairman of the trade association. “If other factors such as increased construction and material prices as well as permanent interest rate increases are added, it becomes difficult for the industry. Europe must become more interesting again for investments, which tend to flow to North America and China due to these developments. And we with our companies must be able to fully use our capacities to advance technical innovations that serve climate protection and the good of society.”
Pressure from China is growing
It was already evident last year that Chinese competitive pressure is increasing. China is striving for autonomy and linking its political goals with economic policy measures. Significant overcapacities in China due to a weak domestic market increase exports to Europe. “If the Chinese companies were then also to be provided with state subsidies, we would no longer have a level playing field here in Europe,” explained Joachim Strobel, Chairman of the VDMA Construction Equipment Section.
Dr Jürgen Blumm, Chairman of the VDMA Construction Materials Plant Engineering Section, also expressed fears. For manufacturers of building materials plants, China is more of an export market; last year, the country was at the top of the list for deliveries abroad. “The situation in the real estate sector continues to be worrying, the risk of the real estate bubble bursting there hangs over us like a sword of Damocles,” noted the company representative. “There is enormous overcapacity in Chinese residential construction.”
Source: VDMA e. V. Construction – Equipment and Plant Engineering Press