The German equipment manufacturing association, the VDMA, says that between January and May 2020, incoming orders for construction equipment in Germany declined by 26% compared to the previous year. The VDMA adds that the months of March to May were the most heavily affected by the COVID-19 crisis. During this period, incoming orders were 40% below the level of the previous year. The industry continued operating due to order backlogs and sell-offs. One positive point raised by the VDMA is that projects were not cancelled, but rather delayed where this was necessary.
Machinery sales from January to May fell by 8% and were relatively stable, especially compared to the rest of Europe. The European market collapsed by more than a quarter during the same period. The figure for the German market will struggle for 2020 as a whole but is currently not anticipated to fall significantly further than the economic downturn that would have been expected without the COVID-19 crisis. The VDMA says that it is important to remember that 2019 was a boom year and that a normal cyclical downturn would have been expected for the industry.
After five months, the global market has declined by 15%. A slight deterioration can be expected for 2020 as a whole.
Overall, global industry sales from German production are still expected to fall by 10 to 30% for 2020 as a whole.
Despite this, hopes and expectations have risen upon the end of the strict lockdown. According to the latest VDMA COVID-19 survey, 31% of trade association members still believe that they will return to the sales level of 2019 by 2021. Another 47% estimate that this will be possible by 2022. Nobody believes that it will take longer than four years for the industry to recover.
Disruptions in the supply chain had already ceased to play a significant role in June, while 88% of survey respondents reported that the adverse effects were either minor or non-existent.
A similar trend is indicated by the CECE Business Climate Index, the most important early indicator of the European construction equipment industry. After manufacturers’ confidence initially collapsed all over Europe, there was a noticeable recovery in June, albeit far below the level of the beginning of the year. The optimism of a V-shaped recovery is being driven by economic stimulus programmes, from which the industry will benefit.
Companies are already addressing the challenges of the post-coronavirus era according to the VDMA. One concern is the increasing competitive pressure: 80% of companies participating in the VDMA flash survey classify this trend as severe or noticeable. More than half see barriers to foreign trade and the fragmentation of the markets as a problem, while 49% see climate change and the associated transition to greener energies and decarbonisation as a difficult task. Only 39% view the switch to environmentally friendly transport as a challenge.
Future topics for the industry include digitalisation, the autonomous construction site, sustainability and progressive construction, as well as climate change and all of its facets. Furthermore, technology and connectivity on construction sites will increase, which will have an impact on existing professions – another challenge.
