Photo: Contributed
Pekka Paasivaara, chairman of the VDMA woodworking machinery association.
VDMA, the German woodworking machinery association, says that after 10 years of growth, the sales boom for the woodworking machinery industry is coming to an end this year. The combination of an anticipated economic slowdown and COVID-19 has had a significant impact and as of September, orders have declined by around 20 per cent compared to the previous year.
"The pandemic has put an additional damper on those industries that were already facing an economic downturn,” Pekka Paasivaara, chairman of the VDMA woodworking machinery association, said at the virtual general assembly.
“However, we are also observing that some customer segments such as the small shop businesses, the sawmilling industry and the further processing businesses in the construction-related sector are still investing even during the crisis."
Future still uncertain
The pandemic is creating a lot of uncertainty about future economic development and that uncertainty is being compounded by the incalculable risks of Brexit, as well as increasing trade restrictions, which are having an impact on the export-oriented machinery industry.
Combining these issues, VDMA anticipates a 15 per cent drop in production in Germany this year.
"In addition to the sharp drop in orders, travel restrictions - to China, for example - continue to hurt the industry,” Paasivaara said. “We are only getting our service technicians to the customer with delays, which further contributes to the drop in turnover as payments are delayed."
For 2021, VDMA expects a slight recovery with an increase of three per cent, despite the restrictions that must be made at present to make a forecast meaningful. That means activity will remain well below that of previous years.
"We expect the current situation to stabilize, however a substantial improvement is not expected in the foreseeable future. But there is reason to hope that we have passed the low point. The number of inquiries with concrete investment plans from customers has now risen significantly again, but uncertainty continues to slow down many decisions," Paasivaara said.
Exports are down
In the first eight months of the year, the export value of German woodworking machinery fell by 15 percent year-over-year to 1.3 billion euros. Among the top-10 export destinations, only Austria, Brazil and Lithuania were able to increase their exports. In the case of the latter two, the increase is the result of deliveries of individual large-scale plants. The two most important markets, China and the U.S., suffered above-average losses of 18 and 42 per cent respectively. The Chinese market is currently showing encouraging signs of recovery. This will have a positive impact on export figures in the coming months.
In the same period, German imports fell by seven per cent to 360 million euros. Of the most important supplier countries, only China was able to increase its imports by 11 per cent to 114 million euros.
Optimism
Despite these challenging times however, companies continue to invest in digitalization.
And even though climate change is not currently top of mind, the topic will pick up speed again.
"It is a breakthrough for our customer industries and thus also for us machine suppliers that wood as a construction material is now receiving the recognition it deserves,” Paasivaara said.
“The positive contribution that wood as a renewable raw material can make to reducing the CO2-footprint, especially in the field of sustainable construction, is enormous. The woodworking machinery industry will do everything in its power to further develop this topic. That means we can look ahead with some optimism."
