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German Mining Equipment Manufacturers have come out of Recession

Accuses the German government of running an energy policy wherein costs and benefits “are out of every reasonable proportion”:  Dr. Michael Schulte Strathaus, President of the VDMA Mining  Association (Photo: VDMA). Accuses the German government of running an energy policy wherein costs and benefits “are out of every reasonable proportion”: Dr. Michael Schulte Strathaus, President of the VDMA Mining Association (Photo: VDMA).

Germany’s mining equipment manufacturers have come out of recession. Following a decline in turnover of approx. 21 percent down to EUR 2.8 billion this year, the sector foresees a stabilization of the situation in 2017. In 2018, things should pick up once again.


Looking domestically, a decline in turnover of 36 percent down to EUR 210 million is anticipated for this year. Revenue abroad will fall by some 21 percent to EUR 2.6 billion was the estimate given by President of the Mining Association at VDMA [Mechanical Engineering Industry Association], Dr. Michael Schulte Strathaus, at the annual press conference at the Zeche Zollverein in Essen.

However, mining equipment manufacturers believe that this will bring an end to the days of sometimes two-figure declines in turnover. The reasons are the rising raw material prices and a newly growing willingness to invest in the raw materials industry. The prices have broadly recovered, says Schulte Strathaus. In the third quarter of this year, the mining equipment manufacturers registered a 12 percent increase in incoming orders in comparison to the same period the previous year. The respective index rose over the same period from 61 to 80 points. However, the period from the receipt of an order to its settlement can run up to 15 months, says Schulte Strathaus. The renewed increase in turnover can therefore be anticipated in early 2018.

Workforce levels maintaied

Despite this not exactly simple situation, the companies have succeeded in maintaining a steady workforce size of what is currently 12,000 employees . “Our member companies have, by dint of strenuous efforts, kept their permanent staff,” says Schulte Strathaus. Changes are not planned.

Schulte Strathaus ascribes the domestic decline in turnover to some EUR 210 million primarily to missing contracts in the hard coal industry – the last hard coal mine will be closed in 2018. Germany operates an energy policy that is fragmented, unpredictable and, from an energy-economy perspective, not always comprehensible, Schulte Strathaus notes.

Lack of planning and campaigns

Although there is no ready substitute at hand, the energy supply safeguarded by brown coal is being undermined. “A lack of planning and exaggerated campaigning, which set out national environmental requirements which go far beyond European and international agreements, are running the show,” says Schulte Strathaus. The bill for all this ends up being paid for by mechanical engineering companies in the form of fewer contracts, and first and foremost by citizens in the form of rising electricity prices. Costs and benefits in the energy policies run by the German government are “out of reasonable proportions”. What the politicians are missing is a sensible plan. Too much reacting and too little action is taking place. The sector anticipates a further fall in revenue in the domestic market in the year ahead.

Healthy business with Turkey

The largest export market for German mining equipment manufacturers is the EU. Approximately 20 percent of the exports go there. Robust business is being done in particular with the United Kingdom, Italy and France. Demand exists in particular for machinery used in tunnel construction. At a minimum similar turnover is assumed for the coming year. Schulte Strathaus also reports robust business with Turkey. In terms of raw materials, the country is increasingly investing in self-sufficiency in order to reinforce its economic foundations and to reduce its dependence on imports from abroad. This is relevant with respect to energy supply from coal as well as to manufacturing industrial metals.

According to Schulte Strathaus, the second most important turnover region – with a share of 11 percent of total exports – is Africa, Northern Africa in particular. Since 2014, exports to this region have almost tripled. The largest markets are Egypt and Algeria. Sales are based first and foremost on machinery and plants related to infrastructure projects. The third largest market is the USA. Approximately 10 percent of exports make their way there.  Sales are based mainly on processing technology and excavating machinery.  Schulte Strathaus expresses doubts as to whether mines will continue to close and coal mining will continuously be reduced under the new President Donald Trump. Trump has not only promised to preserve jobs in this sector, but to even create new ones. The mechanical engineering companies assume that their share of export to the USA will expand in the coming year.

Diversification of companies

Schulte Strathaus considers the increasing diversification in companies to be positive. New products are increasingly brought onto the market and new export regions are also being established. Meanwhile, virtually all the renowned manufacturers are offering machinery for hard rock mining. This is resonating positively among purchasers on the whole. Schulte Strathaus announced a Europe-wide networking of companies. Thus, it should become possible among other things to bring new products onto the market together, with greater impact.

Source: VDMA

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