The Ukraine war and supply problems in the supply chains are depressing the mood in mechanical engineering. But the industry can also look forward to full order books.

Mechanical engineering, one of the most important German export sectors, is pinning its hopes on energy security and an easing of trade problems in China this year.

At the beginning of the Hanover Fair on Monday, the President of the VDMA Association, Karl Haeusgen, spoke of the burdens from the Ukraine war, in the supply chains and in supplies, which were depressing the economy. “But at the same time we can look back on a very high order backlog,” he added. “We therefore continue to expect real production growth for 2022, but we have to reduce our forecast from the previous plus 4 percent to plus 1 percent.”

In principle, the core industry – albeit slowed down – can recover from the Corona crisis. However, this depends on there being no abrupt interruption in the energy supply. Haeusgen also emphasized: “In many places, high investments are needed to realign the value and supply chains.” In China, new pandemic lockdowns also hit German imports and exports hard.

Inflation and scarce raw materials harbor uncertainty

In an optimistic scenario, the key industry expects a nominal – i.e. not price-adjusted – increase in sales by up to 8 percent for 2022, corresponding to possible total revenues of 239 billion euros. However, inflation in connection with scarcer raw materials and preliminary products is one of the greatest uncertainties. And industrial producer prices have outpaced retail prices in many countries.

A survey suggests that in the Russian business, which is important for machine and plant manufacturers, there could almost be a total failure due to the sanctions since the beginning of the war at the end of February. According to this, 95 percent of the approximately 300 participating VDMA members stated that their activities in Russia had been noticeably restricted or had come to a complete standstill.

Three out of four companies expect further deterioration or even an end to their Russian activities. Regarding the debate about independence from Moscow and the implementation of the EU climate protection packages, Haeusgen said that “a much greater focus must now be placed on increasing energy efficiency”.

In the first quarter, exports including price increases increased by 0.4 percent to 43.6 billion euros compared to the same period last year. In March, they fell by 6.2 percent. Business in the USA has been especially good lately.