VDMA predicts 4% growth in 2006, but worries about material cost and exchange rates

Although overall value of core German plastics and rubber machinery produced in 2005 fell by 7.5% to E4.615bn in 2005, Germany’s VDMA forecasts 4% growth in value in 2006 and 7% growth in incoming orders for 2006 on the basis of strong growth of incoming orders in the first few months of this year.

It is concerned, however, about the effects of exploding raw material costs on the industry’s European customers ability to invest in machinery and the possibility of the Euro strengthening beyond US$1.30. VDMA figures show that extrusion machinery, with 1.7% growth to E785m, did better than injection moulding machinery, with its 3% decline to E855m.The number of staff employed by the industry in Germany declined by 1,000 to 29,000.

With imports down 1.4% to E628m and exports down 10.4% to E3.343bn, there was 3.7% growth in extrusion machinery exports to E479m and a decline of 2.7% in injection moulding machinery exports to E698m. While exports to European countries grew 2.7% to E1.701bn, exports to Asia fell sharply by 29.9% to E893m, and north America fell less, with a 8.9% decline to E419m. The US replaced China in 2005 as the most important export sales market and Russia moved up to the third position.

VDMA points out that although the worldwide share of German plastics and rubber machinery fell by 2% to 24.4%, it still leads against the 12.7% Italian share (down from 13.4%) and the respective 9.4% and 9.1% shares held by US and Japanese producers. The association notes that Chinese producers increased exports strongly by 40%, with 4.6% of Chinese production exported, against 3.2% in 2004; Chinese producers now hold a world market share of 12.4%, close behind that of Italian producers.