The CECIMO 2009 Spring General Assembly, which was held in San Sebastian (Spain) on 9th June 2009, was the occasion for the European machine tool builders and their representative associations from fifteen countries to analyse in-depth the impact of the economic crisis on their industry.

The European Machine Tool sector has been sitting in the heart of the crisis since the last quarter of 2008. The sector is strongly dependant on industrial production and capital investments, the first quarter of 2009 has experienced a drop in new orders of machine tools by more than 53% over the same period last year. Global end-user markets suffered weak demand and in consequence reduced investments in machine tools as one of the first cost cutting measures. Mr. Javier Eguren, President of CECIMO, states: “the automotive sector, representing approximately 30% of the revenues of the machine tool industry, currently refrains from investing.”

As a result of the global weak demand in end user markets, European consumption of machine tools is expected to drop between 30% - 40 % in Europe in 2009. Economic forecasters predict that Asian, and particularly Chinese and Indian consumption will be less affected than in Europe or in the US. In order to cope with the downturn, European machine tool builders reduced their inventory levels and focused on labour flexibility with reduced working times to retain strategic skills. Mr. Filip Geerts, Secretary General of CECIMO, highlights: “The combination of dropping orders in the first quarter of 2009 along with reduced inventory levels will directly impact the overall production of new machine tools in 2009”.

Despite the current difficult economic environment, this is not an issue of competitiveness because CECIMO is still leading the global market for the production of machine tools with a 44% market share. However, this leadership may be put in question in the longer run should Europe not benefit from stimulus plans like our Asian and American competitors.

For instance, with 32% of the global consumption of machine tools in 2009 (more than 12 billion €) from which 15% comes from imports from CECIMO countries, what happens next to the Chinese market is crucial to the European machine tool industry.

Mr. Frank Brinken, Chairman of the Economic Committee notes: “a positive sign is the slowing decline in the manufacturing business confidence indexes in most countries since April 2009. Investments into renewable energies and energy efficient manufacturing technologies might be another driver”. CECIMO also expects some good business opportunities for the European machine tool manufacturers during the EMO Trade Fair, which will take place in Milan (Italy) from 5 to 10 October 2009.

However, most industrial economists are sceptical about a sustainable recovery before 2010, and such a prolonged downturn presents a challenge to keep our skilled workforce in Europe.

CECIMO has already strongly voiced towards EU Officials in the recent months that how machine tools are a key element of a sustainable manufacturing activity and work place competitiveness in Europe. Governments must be aware that without machine tools, the manufacturing sector will die quickly and irreversibly.

CECIMO firmly believes that the current economic downturn is also a good opportunity to develop new business models and technologies in the machine tools industry, leading to new key competitive advantages. This will further strengthen the undisputed European leadership in the global production of machine tools.