Mechanical engineering damps expectations
The trade disputes between the world's major economic blocs have lost none of their sharpness or explosiveness in recent months.
- VDMA lowers production forecast from 2 to 1 percent
- Uncertainty on world markets makes itself felt
- German and European industrial strategies must promote and relieve the burden on SMEs
- Machine learning and artificial intelligence increasingly used in mechanical engineering
- OPC UA: World language of production developed by VDMA and member companies
Hanover, 1 April 2019 - The trade disputes between the world's major economic blocs have lost none of their sharpness or explosiveness in recent months. The disputes over customs duties and other trade barriers are increasingly unsettling market participants and dampening the investment mood. This is now also reflected in the mechanical engineering business. "Although the existing order range of 8.5 months on average still buffers production well in the first few months of the current year," said VDMA President Carl Martin Welcker at the association's business press conference at the start of Hannover Messe 2019. With a further increase in the number of employees by 33,000 to 1.065 million (in companies with more than 50 employees) and a good 1.3 million in total, mechanical engineering remains the largest industrial employer in the country. "But the economic momentum is ebbing away, both at home and abroad. And the politically induced risks in important sales markets are having an effect without solutions in sight," he warned. The VDMA has therefore lowered its production forecast for 2019 from previously plus 2 percent in real terms to plus 1 percent, Welcker explained.
Export ratio reaches 79 percent
The importance of exports and free market access for machine builders from Germany increased again slightly last year. In 2018, the industry achieved an export ratio of almost 79 percent. Exports increased last year by 4 percent in real terms to almost 178 billion euros compared to the previous year, total sales in mechanical engineering reached a record level of 232.5 billion euros in 2018 (plus 1.3 percent) and production grew by 2.1 percent in real terms. "We had originally forecast a production increase of 5 percent for 2018, but material shortages and staff shortages prevented such growth. In addition, many companies have been reluctant to build up the capacities required for higher production due to the growing uncertainties and risks," explained the VDMA President.
Trade disputes must not escalate any further The
United States narrowly defended its position as the largest single sales market for machine manufacturers from Germany in 2018. American customers are also likely to invest this year in the automation of their production, among other things. However, the positive effects of the US corporate tax reform are gradually waning. In China, the second-largest single market, the VDMA also expects economic momentum to weaken. However, the will of the Chinese government to implement the master plan "Made in China 2025" should ensure further investment and thus export opportunities. "But above all there is the danger of a further intensification of the trade dispute between China and the USA", Welcker restricted. "We're hoping for an early de-escalation of the situation."
This also applies to the still smouldering trade dispute between the USA and the EU. Europe must find strategic answers to US President Donald Trump's attempt to enforce American law through extra-territorial sanctions around the world. At the same time, it is important not to lightly jeopardize the close trade relations across the Atlantic that have developed over decades. The VDMA therefore emphatically demands that the EU now quickly grants the negotiating mandates for a lean free trade agreement with the USA and thus does not wait until after the European elections. The result of such a free trade agreement must be the abolition of all industrial tariffs and technical barriers to trade, as well as the mutual recognition of conformity assessments.
Industrial policy must benefit small and medium-sized enterprises Mechanical engineers are
positive that both in Germany and in the EU industrial policy and the necessary flanking of industry are again being debated in global competition. "That was as right as it was overdue," Welcker stressed. For too long, too little attention was paid to digital change in Berlin and Brussels. However, the VDMA takes a critical view of the political considerations of wanting to regulate and steer the industry even more strongly and to prefer certain technologies in the process. "We need market principles and an openness to technology. The state is not the better entrepreneur or engineer," warned the VDMA President.
Machine Learning and Industrial Intelligence
Digital change is also making ever greater inroads into mechanical engineering. Initially, the company's own products were made Industry 4.0-capable and the data evaluation of machines intensified, but now the focus is increasingly on new business models and the use of machine learning and industrial intelligence in production. According to a recent VDMA survey, the proportion of companies that have defined a digitization strategy for products, services and processes has now risen from 21 percent (2016) to 40 percent (2018). Internet of Things platforms are now important for three-quarters of mechanical engineering companies on average, and almost 30 percent already have corresponding solutions in use. By way of comparison, in 2016 these platforms were still unknown to more than 60 percent of the companies or had no relevance.
High investments in artificial intelligence Companies also see great opportunities to secure and expand their own technological leadership through the increasing use of artificial intelligence (AI) in production. In 2019, German mechanical engineers want to invest a projected 400 to 500 million euros in the development and use of AI/Machine Learning-based solutions. That would be a good 6 percent of the total investment sum in mechanical engineering. Two thirds of the companies surveyed are already investing in this area. In particular, the obstacles on this path are the lack of qualified data material needed for learning the algorithms and the lack of qualified personnel. The VDMA is committed to this by, for example, using its junior staff foundation to pass on new requirements to vocational schools and trainers. The requirement profiles for engineering training were also revised. "Other countries like China or the USA may be ahead of us in basic research on artificial intelligence. But the added value only comes from the targeted combination of algorithms with real physics. This is the strength of mechanical engineering," said Welcker. This makes it all the more important for smaller companies to recognise the benefits and possibilities of machine learning and artificial intelligence.
Success story OPC UA
The subject of machine communication has developed into a success story for mechanical engineering and the VDMA. A few years ago, the industry agreed on a uniform interface for digital production so that machines and systems can be networked error-free and manufacturer-independent and communicate with each other: OPC UA (Open Platform Communication Unified Architecture). It enables end customers to act more flexibly in their production. What has long been possible in the office with the USB standard is now becoming reality in production.
However, this only sets the basic vocabulary for machine-to-machine communication. Now so-called OPC UA Companion Specifications (accompanying specifications) must be developed for all machine types. The VDMA sees itself as an international gravitational centre for this movement, which is being promoted in close cooperation with the OPC Foundation. "Here we define the world language of production - Made in Germany," Welcker emphasized.
The VDMA, together with its member companies, industrial customers and suppliers, is doing decisive work. Today, around 350 mechanical engineering companies are already involved in the respective VDMA working groups - and the trend is growing strongly. "This is the only way to make plug and work possible in the factory," Welcker explained. We create the universal remote control, so to speak - and that theoretically works for all machine types."
At the Hannover Messe, the VDMA will be demonstrating the global degree of networking with the 1st World Interoperability Conference. "On the first day of the fair, around 30 international organisations will be giving an insight into the machine-to-machine communication of tomorrow," said the VDMA President.