Transformation in a Difficult Environment – Incoming Orders Slump by 30 Percent in the First Quarter
- Transformation: decarbonisation and defossilisation as decisive factors
- Global economic situation puts pressure on current investment behaviour of customer groups
- Moderate turnover development expected from 2024
German plastics and rubber machinery manufacturers closed the year 2022 with a price-adjusted increase in turnover of 10 percent. In nominal terms, the increase amounted to 18 percent. “This growth stems from the numerous orders the sector was able to attract in recent years and shows that the supply chains have eased to some degree,” explains Ulrich Reifenhäuser, Chairman of the Plastics and Rubber Machinery Association at the VDMA. Currently, the order books are still reasonably full, which hints at a comparatively good sales year in 2023.
Subdued expectations for 2024
Expectations for the turnover trend from 2024 onwards are cautious. “We lost new orders last year, with a price-adjusted minus of 13 percent, and in the first quarter of 2023 even more significantly at minus 33 percent”, says Thorsten Kühmann, Managing Director of the Plastics and Rubber Machinery Trade Association. “That probably means fewer orders on the books that can be processed and converted into sales in 2024.
World economy shows low growth due to high inflation and high interest rates
Unfortunately, there is not much hope that demand will pick up again in the short term. The global economic climate with low growth, high inflation and correspondingly high interest rates is unsettling investors. On the one hand, the plastics and rubber machinery manufacturers will benefit from the American economic stimulus package IRA (Inflation Reduction Act), but it remains to be seen whether this will be enough to boost the global economy again. The areas of e-mobility and packaging are still the most promising in terms of growth opportunities. In China in particular, the transformation towards the electrification of vehicles is advancing at an enormous pace, and the rising global population is also increasing the demand for packaged food. In both cases, plastic can bring its advantages to bear.
Transformation: decarbonisation and defossilisation as decisive factors
Against this background, the major tasks of decarbonisation and defossilisation of the plastics industry are even more challenging: The plastics industry is already in the middle of the transformation process towards a circular economy. This is in line with the goals of the two aforementioned mega-trends. But reducing carbon emissions or even establishing carbon-neutral production requires investment and restructuring.
This is currently countered by the planning uncertainty experienced by many companies and customer groups, particularly where issues of energy supply and the corresponding costs are concerned.
Plotting the strategic course for the industry
For the trade association and its board, the focus is therefore on plotting the strategic course for the plastics and rubber machinery manufacturing industry and its partners along the value chain. This includes the following areas of action:
Recruiting young talent – time to cooperate!
Attracting committed young people to mechanical engineering and in particular to the plastics industry is a joint project. The trade association is working intensively with the VDMA Education Department. The figures collected there show that the shortage of skilled workers is seen as the greatest risk in mechanical engineering. The cause is a demographic change on the one hand, and competition from other sectors that seem more appealing to young people on the other. Very often, they do not have a clear picture of what mechanical engineering entails, neither of its achievements for climate protection nor of the career opportunities it offers. This is even more true for the plastics industry, which has to contend with an image problem. On the other hand, the satisfaction rate of technical trainees with their companies and their jobs is very high.
In this area of tension, the representatives of the associations of “Wir sind Kunststoff” (We are plastics), GKV, PlasticsEurope and VDMA came together to jointly address the issue of young talent here as well. There are initial ideas: for example, how to attract more women to the plastics industry through good examples across all levels of the company and networks. Another area of activity is to attract employees from abroad. In this field, mechanical engineering with its international networks is well positioned.
Circular Economy made in Europe – technology is the key to global success
If circular economy is to work effectively, we need to think globally. Climate change, scarcity of resources, and the avoidance of environmental damage caused by plastics are not local problems. Mechanical engineering plays a central role in its implementation. The trade association has therefore developed an event format at which, through a joint campaign, member companies can present their technological know-how as system providers focused on plastics recycling and the processing of recycled materials within key sales markets. It is important to take local specifics into account and to involve local players. The first venue will be Mumbai in India.
Digitalisation as an enabler of CO2-neutral production
Production processes are to become increasingly resource-efficient; CO2 emissions are to be reduced or avoided altogether. In order to find the savings potential and make the efficiencies measurable, the individual process steps must be digitally inter-networked, with the best scenario being across the entire value and supply chain. This will support users not only in the increasingly strict documentation and reporting obligations, but also in the conception phase of new product types. A digital test version can save energy use and material. Using alternative materials instead of fossil raw materials can drive their marketability; however, digitalisation also helps at the end-of-life stage when sorting plastic waste into single-variety material streams.
There is another factor involved in the digitisation of production: work structures are changing due to increased automation, which aids companies with a lack of workers, who need fewer, but better trained skilled workers.
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