At its General Assembly in Tampere, Finland, CECIMO, the European Association of Manufacturing Technologies, reported a strong performance for the European machine tool sector in 2023. Despite experiencing a short-term decline in order intake at the beginning of 2024 due to political and economic uncertainties, improvements in key financial indicators and decreasing inflation are expected to lead to an increase in orders in the latter half of the year
Economic situation and outlook
A mix of divergent trends marked the previous year. European machine tool manufacturers increased their production by 7% in 2023 compared to 2022. The robust production momentum continued throughout the year, reaching approximately €27.2 billion, which accounted for around 33% of global machine tool output. Additionally, European machine tool exports grew by about 23% in the last quarter of 2023 compared to the previous quarter, while imports into Europe rose by around 5% during the same period. The US and China were the leading export destinations for European machine tool producers in 2023, with the US taking the top spot. Japan, China, and Taiwan remained the top suppliers of machine tools to CECIMO countries. However, these positive trends were tempered by some negative factors. For instance, consumption levels in CECIMO countries fell by 1.8% throughout 2023, and orders in the fourth quarter of 2023 were 16% lower than in the same period of 2022.
«The European machine tool industry has shown remarkable strength», commented Francois Duval, CECIMO President. «Our resilience shows the industry’s ability to adapt and thrive in changing circumstances».
In 2024, consumption levels in CECIMO countries are projected to fall by 1.8%. Preliminary data also indicate a 5% decline in CECIMO production compared to 2023. Compounding these challenges, geopolitical tensions, supply chain disruptions, weakening global demand, and market volatility have significantly impacted the sector, leading to a 20% decrease in orders during the first quarter of 2024 compared to the same period last year.
Despite these setbacks, preliminary indicators point to a more positive outlook for the near future. Easing supply-side pressures, improved economic conditions, increased confidence, a reduced risk of gas shortages, and lower inflation rates suggest a moderate recovery for the remainder of the year. Additionally, the Global Purchase Manager’s Index has remained above 50 index points since January 2024, signaling a positive trend. The European Central Bank is also expected to continue lowering interest rates, which could further support the recovery.
Looking ahead, consumption levels in CECIMO countries are anticipated to rise by 6.3% in 2025, while global consumption is projected to increase by 8.6%, creating opportunities for European machine tool manufacturers. The coming months will be critical for European manufacturers, with their success dependent on a rebound in orders.
At the Economic Committee meeting, Marcus Burton, the Chairman of the Committee, discussed the outlook for new orders in Q1 2024. He noted: «Despite the foreseen downturn in new orders throughout the first period of 2024, there is a prevailing expectation of a robust growth in orders in Q4 2024. This recovery is expected to be driven by better economic conditions and by an upturn in consumption levels».
Penna Urrila, Head Economist at the Confederation of Finnish Industries, remarked: «While inflation, interest rates, and monetary policy are gradually improving, long-term risks that could hinder European recovery are tied to the evolving geopolitical landscape and climate change.»
Future EU leaders must take decisive actions to enhance economic growth expectations, revitalize the EU economy, and secure a prosperous future for the European machine tool sector amid geopolitical challenges and uncertainties related to the US presidential elections. By tackling these issues proactively, the EU can cultivate a stable and flourishing industrial environment.
