German plastics and rubber machinery manufacturers were prepared for less than lustrous results for 2019. Coming after a decade of boom years, the 6% drop in turnover reported by the VDMA trade association Plastics and Rubber Machinery seemed inevitable.
As chairman Ulrich Reifenhäuser noted: "After 11 years of growth, this break did not come as a surprise for the industry."
Signs suggesting increased investment restraint in many major customer industries, but especially the automotive sector, had been apparent from the order books for some time, Reifenhäuser said.
“Moreover, there is the image problem of plastics.”
The situation has been considerably exacerbated by the outbreak of the current Coronavirus pandemic.
Orders for the first five months of 2020 were down 20% compared to the previous year.
"The pandemic was the stab in the back for customer industries that had already been performing badly,” said Thorsten Kühmann, managing director of the VDMA trade association. On a more positive note, he noted that ‘in times of the Corona crisis many plastics and rubber machines are being supplied particularly to the sectors of medical engineering and packaging’.
The pandemic has had another effect, as well: it has served to show that plastics can have benefits, especially where hygiene is concerned, leading to what Kühmann described as ‘a noticeable image improvement in society’. "However, we are aware that we are currently undergoing an exceptional situation and the shift in image will not have a long-term impact," he said.
In the first five months of the current year, German exports of plastics and rubber machinery declined 19% compared to last year.
Exports to China and to the US declined 3% due to the Coronavirus crisis. While the Chinese market is starting to show signs of revival, the decline in exports to the US is only the beginning.
Exports to the countries of Europe have likewise been impacted by the pandemic. Particularly steep drops were seen in the volume of machinery exported to Italy, which was down 31%, to France (-42%) and to Spain (-48%). Exports to India plummeted by 73%.
On the other hand, imports of plastics and rubber machinery from Germany by both Russia and Turkey rose, compared to the same period last year. Exports to Russia rose 28%, while the volume of Turkish imports climbed 102%.
The future, however, is rife with uncertainty. The pandemic, combined with the somber outlook for the automotive industry and the uneasy trade relations between the US and China, are all factors that weigh negatively on the export-oriented engineering sector.
In addition, the effect of the plastic tax recently adopted by the European Commission remains to be seen. All in all, the majority of manufacturers of plastics and rubber machinery are predicting a decline in sales of up to 30% in 2020.
Yet not all is doom and gloom: the recovery plan drafted by the European Union sends a strong signal that collective action will be taken to address the economic impacts of the Coronavirus crisis.
In addition, a clear 80 % majority of German plastics and rubber machinery manufacturers expect a return to the turnover volumes of 2019 by 2022, at the latest, with some looking for this to happen as early as next year. Incoming orders from western Europe and China are expected to rise in the second half of 2020 – the first indications of a turnaround.
And regarding efforts to create a more sustainable industry, German machinery manufacturers have indicated that they will continue to contribute their share to implementing a successful circular economy.