The China International Machine Tool Show (CIMT) is complete. The show was huge and the attendee numbers were unbelievable.
China: While it’s easy to see that the market in 2019 was softer in the first quarter than it was at the end of 2018, CMTBA confirmed this observation in their opening remarks at the meeting. Even with the soft finish to 2018, total revenue was up 8.3 percent while production and consumption fell modestly year over year. As the year ended, China’s Purchasing Managers’ Index fell below expansion levels into contraction. The first three months of 2019 followed that pattern. However, our Chinese hosts were optimistic as the prospects for GDP growth have improved and the Purchasing Managers’ Index climbed above the expansion line signaling a short-lived downturn for the Chinese manufacturing technology market. Although they see the auto industry continuing to have issues in 2019 and lighter spending on capital equipment by the 3Cs (computers, communication, and consumer electronics), they expect other key customer industries and policy changes that encourage consumer spending to reverse the downward trend in manufacturing CAPEX in 2019.
Germany: Abnormally large backlogs offsetting declining orders in late 2018 was a common theme in the reports by EU associations. VDW reported that fourth quarter orders fell significantly from the same quarter in 2017. This yielded an increase of 1 percent in orders booked in all of 2018 versus 2017 while they posted a 14 percent increase in consumption. Orders in the first quarter of 2019 were not impressive and, therefore, the German market starts the year behind the same time frame in 2018. However, the VDW projects a turn around in the last two quarters that will yield modest single-digit increases in both production and consumption levels relative to 2018.
UK: BREXIT is playing havoc with businesses being able to make decisions in such an unstable situation. There have been false positive expansions in the past two years as opinion sways from dumping inventories to stockpiling critical components for manufacturing processes. At the end of 2018, consumption was down while the order bookings were expanding. Even with the backlog in orders, the uncertainty with BREXIT makes it impractical to forecast how 2019 will end. France, Spain, and Switzerland all expressed similar trends with 2018 ending well and 2019 starting soft. Each countries’ association, as well as the umbrella association for Europe’s manufacturing technology associations, CECIMO, project low single-digit growth in consumption in their countries and the EU as a whole in 2019.
India: Other notable points made by other associations included a stellar outlook for the Indian manufacturing technology market. Consumption of manufacturing technology in India has grown by nearly 20 percent in each of the past three years. India’s association (IMTMA) reported that they expect 2019 will be very close to the 27 percent increase in 2018 over 2017. “Our industry has a bright future,” said Mr. Phani Raj, as he laid out India’s plan to move the GDP share of manufacturing as a whole from 17 percent today to 25 percent by 2025. The first initiative is the creation of a machine tool park in Bangalore to foster greater investment in domestic manufacturing technology capacity.
Korea: Although not somber, the Korean report was significantly different. The Korean manufacturing technology industry bounced back in 2017 growing 14 percent after a 21 percent fall in 2016. In 2018, the market basically was able to hold onto 2017 levels for production and consumption but 2019 has not started off well. The Koreans presented an optimistic position for 2019 but it sounded like the rest of the year will move up modestly to offset lost ground in the first quarter.
United States: AMT reported that 2018 was a phenomenal year, which ended with significant backlogs and manufacturing technology orders up 19 percent. This momentum carried into the first quarter of 2019 but the market is shaping up for a downturn during the second quarter or at the start of the third quarter. Export data collected on our major Asian trading partners show that import levels will pick up significantly in the next three months. The increase in imports will make a modestly growing or slowing market more challenging with incentives likely to expand from current levels. AMT also shared with several of our European counterparts that we believe the downturn will be of modest duration. Certainly, much shorter than the last cycle and probably less than 18 months.
In general, there was a sense of optimism with respect to the global market for manufacturing technology. The associations exchanged a significant amount of specific product data in addition to our short presentations on the market. If you have any questions about an overseas market trend or specific data on a technology market in a foreign country, don’t hesitate to contact me at 703-827-5255 or pmcgibbon@AMTonline.org. If it isn’t covered in the material that was exchanged, our overseas staff and analysts in McLean are likely to be able to answer your questions about historical and forward-looking trends in foreign markets.
