Mechanical engineering: Sales decline in 2020 smaller than feared
Results of the 9th VDMA Flash Survey
Four out of five companies will close the 2020 financial year with a decline in sales. Nevertheless, the proportion of companies that have managed to avoid a minus has risen from 13 to 21 percent since the end of September. This is the result of the 9th VDMA flash survey, in which 575 member companies participated on Jan. 20-22, 2021.
"Numerous machinery and plant manufacturers benefited from the economic upturn in the fourth quarter of last year and entered the new year with momentum. As a result, around one in six companies ended the fiscal year with an increase in sales of between 0 and 10 percent," said VDMA chief economist Dr. Ralph Wiechers.
But in the end, sales declines were also lower than feared in mid-2020. According to the VDMA, 42 percent of companies had sales losses of between 10 and 30 percent. At the beginning of July, 54 percent of companies still expected a drop in sales of this magnitude.
Order situation eased from Q4 2020 onwards
The order situation has gradually improved in recent months. Currently, 14 percent of companies still report serious order losses. In September of last year, this figure was twice as high. 39 percent of respondents report noticeable losses in incoming orders, while 15 percent of companies now no longer see themselves affected by order losses or cancellations, nine percentage points more than the comparable figure in September 2020.
Overall, companies are also somewhat more optimistic about the order situation in the next three months: 23 percent of companies expect the easing on the demand side to continue (September 2020: 20 percent). By contrast, 13 percent believe that the order situation will tighten in the coming months (September 2020: 17 percent).
Travel restrictions still a problem
According to the survey, 88 percent of businesses still feel impacted by travel or residency restrictions. 79 percent of respondents rate the inability to plan as problematic. Last but not least, supply chains are coming under pressure again. "Last fall, 10 percent of companies reported noticeable or severe disruptions in their supply chains. Now, twice as many companies are reporting this, at 20 percent," Wiechers explains.
Short-time working is being lifted in more and more companies
The recent noticeable economic recovery has also had a positive effect on companies' capacity adjustments. 48 percent of companies have short-time work, and 47 percent are working with hiring freezes. In September of last year, 64 percent of businesses still reported short-time work, and 62 percent had imposed hiring freezes. "The decline in short-time work should not hide the fact that the situation on the labor market remains tense. Around one in five mechanical engineering companies - 22 percent - are currently reducing staff or plan to do so in the foreseeable future," Wiechers emphasizes.
Mechanical engineering sector optimistic for 2021
For 2021, many companies are nevertheless confident that they will be able to overcome the consequences of the pandemic step by step. Around three out of four companies expect sales to grow. Almost every second company considers an increase of between 0 and 10 percent to be realistic. Forty-three percent of the companies each expect progress, particularly on the sales markets of China and North America. On the Chinese sales market, a further 14 percent of companies believe that a significant improvement is possible. "By contrast, machinery and plant manufacturers are less positive about developments on the European sales markets, including Germany. In Germany in particular, 65 percent do not expect any change for the better," explains the VDMA chief economist.