German Machine Tool Industry Faces Decline in Orders Amid Global Economic Challenges
Orders received by the German machine tool industry in the fourth quarter of 2024 showed a significant decline compared to the previous year. Domestic orders fell by 7%, while export orders dropped by 6%. Overall, incoming orders in 2024 decreased by 19%, with orders from Germany down by 9% and export orders plunging by 24%. Dr. Markus Heering, Executive Director of the VDW (German Machine Tool Builders’ Association) in Frankfurt am Main, acknowledged the challenging state of the industry, stating, “The situation remains challenging for our industry.”
The US market offers potential opportunities for German manufacturing technology, which is highly regarded and considered indispensable in many sectors. However, Dr. Heering pointed out the significant risks posed by former President Donald Trump’s tariff policies, which continue to complicate trade relations and raise concerns about a possible trade war. These uncertainties, coupled with global economic turbulence, are affecting companies’ willingness to invest.
The automotive and supplier industries are particularly burdened by this critical situation, adding to the overall strain faced by the German machine tool industry. Despite these challenges, there are some rays of hope. Dr. Heering highlighted that sectors such as aviation, medical technology, precision engineering, energy, shipbuilding, and armaments have seen notable orders, providing a potential avenue for recovery. Additionally, business in services, components, repairs, maintenance, and conversions has proven more resilient than the sales of new machines, with these sectors experiencing stronger demand.
However, overall order volumes worldwide fell by 25% in 2024, underscoring the global slowdown in the machine tool market. Dr. Heering remains cautious but optimistic, stating that a recovery in momentum is unlikely before the second half of 2025. He anticipates that a decline in inflation and interest rates will help stimulate investment and, ultimately, support a rebound in the industry.
Dr. Heering also called on the German government to take decisive action to help stimulate growth in the sector. “We expect the new German government to provide clear support in meeting all the points that the industry has been making for months now — cutting red tape, reducing costs, boosting competitiveness, and fostering investment activity,” he explained.
The two-year decline in orders has already begun to affect machine tool production, with production levels falling by a moderate 4% in 2024. Experts predict a sharper decline of 10% in 2025, signaling that the full impact of the downturn is still being realized.
In conclusion, while there are challenges ahead, the German machine tool industry remains focused on adapting to a rapidly changing global landscape, hoping for a recovery in the latter part of 2025.
