Global development of the mechanical engineering industry
Europe, China, the USA and Japan are core markets for the mechanical engineering sector. MM International provides an in-depth insight into these dynamic markets in the midst of global policies such as Trump’s trade policy and the Brexit deal.
“Casting the world, forging the campus, shaping the universe, welding the rest of all branches, because we are the men, we are the machine, and we are Mechanical Engineers.” This popular quote says it all! Mechanical engineering is highly regarded as the ‘Mother of engineering’ and is also one of the dominant industries throughout the globe. Known for its high volume production, the industry also makes significant contribution to a country’s economy.
The European Union is the world’s largest exporter of machinery. Statistics revealed by the European Commission state that mechanical engineering is responsible for 9.5 % of all the production in EU manufacturing industries and that it is one of the largest industrial sectors in the EU economy in terms of number of enterprises, employment, production and the generation of added value. Germany is one of the big players in the region that contribute to the global machinery industry.
In terms of the current market scenario, the federal authority of Germany, the Federal Statistical Office has reported that in the first nine months of this year, machine deliveries increased by a nominal 5.2 % or 6.5 billion euros to 131.9 billion euros compared to the previous year. In addition to this, a report by the largest industry association in Europe, VDMA states that in the third quarter (July - September) of 2018, German mechanical engineering companies recorded an increase in exports of 3.9 % to 43.8 billion euros. In this scenario, the Brexit deal is a worrisome issue but industry players across Europe are hoping for the best.
China is the world's largest producer of machinery and the Asian giant also ranks second in terms of global machinery exports, the first being Germany. According to data released by the Beijing-based China Machinery Industry Federation, the total exports by the country's machinery sector stood at 406 billion dollars in 2017, up 8.33 % from 2016, while imports during the same year jumped 12.31% to 306.3 billion dollars.
Forecasting the growth of the Chinese machine manufacturing market, the country’s industry officials opined that the manufacturers are expected to maintain a 7 % year-on-year growth in exports this year on the back of the country’s Belt and Road Initiative. The rise of China can be attributed to the numerous hefty subsidies given to state-owned mechanical engineering companies under the ‘Made in China 2025’ programme. However, this also has a major drawback, Ulrich Ackermann, Head of VDMA Foreign Trade mentions: "These subsidised or non-market-oriented mechanical engineering companies are increasingly conquering the global export markets including the EU and distorting international competition." This strategy has left the mechanical engineering industry of other countries such as the USA, France, the Netherlands and the UK behind.