First signs of a storm


The corona pandemic reached the mechanical engineering industry at the end of the first quarter: in March 2020, order intake fell short of the previous year's level by 9 percent in real terms.

Domestic orders fell by 2 percent. The decline in foreign orders was more pronounced at 12 per cent. "This suggests that the spread of the pandemic, which started in China and then reached Europe, can now be felt here," explains VDMA Chief Economist Dr. Ralph Wiechers. "The full impact of the crisis will not be felt in the mechanical engineering industry until the following reporting months," said Wiechers, adding that 14 percent fewer orders were received from the euro zone in March, and 11 percent fewer from non-euro countries. Several VDMA surveys among its member companies have shown that difficulties in the supply chains consistently affect about half of the companies. On the other hand, problems on the demand side, i.e. customer orders, have increased significantly, as reported by three out of four mechanical engineering companies surveyed.

"The full impact of the crisis will only become apparent in the mechanical engineering sector in the following reporting months".

By contrast, the entire first quarter of 2020 shows a decline in orders in the mechanical engineering sector of only 2 percent in real terms; domestic orders actually increased by 1 percent during this period, while foreign orders fell by 4 percent year-on-year. "At the beginning of the year we were still hopeful that the year would bring better business, as the leading indicators had indicated. Then the pandemic intervened," says Wiechers. In the first three months of the year, 5 percent fewer orders came from the euro countries, while new orders from non-euro countries fell by 3 percent.

Last year, the mechanical engineering industry in Germany had already recorded a 9 percent drop in orders compared to the previous year. In 2019, the industry's sales fell by 2.8 percent in real terms to 228.7 billion euros, while production fell by a nominal 0.5 percent to 224 billion euros. Further industry figures can be found in the brochure Mechanical Engineering in Figures and Images 2020, which is available for download here.