Change in trend German machine manufacturers are diversifying

Related Vendors

Verein Deutscher Werkzeug- maschinenfabriken e. V. (VDW)

Taiwan Machine Tool & Accessory Builders' Association (TMBA)

Wuxi InfiMotion Technology Co., Ltd.

SIMTOS (Seoul International Machine Tool Show)

In 2023, the German machine tool industry supplied around 27 percent of its production to the automotive industry and its suppliers, according to a recent survey by VDW.

However, the above result also corresponds to a decrease of around 16 percentage points in just four years. "The automotive industry remains one of the most important customer industries for the German machine tool industry," comments Franz-Xaver Bernhard, the chairman of the VDW (Association of German Machine Tool Factories).

As a result, however, two developments are reflected: On the one hand, due to the transformation to electric drive, the industry is investing significantly less in machining. On the other hand, the machine tool manufacturers are also diversifying their customer portfolio, as Bernhard has noted. In fact, the share of OEMs has more than halved since 2019 to 10 percent, while the share of suppliers has only dropped from 19.9 to 17.2 percent.

You can make money with e-mobility

However, many machine tool manufacturers have adapted early to the transformation, and also serve the market for electric mobility. Wolfram Weber, member of the management board at Grob in Mindelheim and chairman of the VDW Economic Committee, says on behalf of others: "We reacted early to the change towards the electric motor and entered this business area as early as 2016." Today, they offer the appropriate systems for drive and energy storage systems, which is reflected in the business figures. Because the machining systems also produce workpieces for e-mobility to a large extent, this sector makes up around 60 percent of Grob's performance of around 1.8 billion euros in the 2023/24 financial year.

In 2023, for the first time, the most important buyer of machine tools with a share of around 30 percent was mechanical engineering, because it serves diverse sub-sectors. Its share has increased by six percentage points since 2019. The most important sub-sectors include tool and mold making, the machine tool industry itself, the agricultural machinery sector, as well as components for hydraulics and pneumatics, or drive technology.

Heller Group delivers less and less for internal combustion engines

This change is exemplary for the necessary diversification and innovation in mechanical engineering to successfully meet the challenges of a changing industrial landscape. One person who has drastically reduced the supply share of the automotive industry is Dr. Thorsten Schmidt, CEO of the Heller Group from Nürtingen. He notes: "While in 2017, 80 percent of our sales came from business with the automotive industry, this share fell to 50 percent by 2022."

Last year, only six percent of incoming orders were for the internal combustion engine. However, the truck and agriculture sectors continue to be of central importance to Heller. Schmidt: "We now manufacture turning and milling centers as well as 4 and 5-axis machining centers for the tool and mold making industry, the aerospace industry, general mechanical engineering, and many other sectors."

Other industrial sectors are also important

After mechanical engineering and the automotive industry, the most important customer industries in the ranking are the manufacturers of metal products, aerospace, electrical engineering and electronics, metal production and processing. Other significant customer industries are precision mechanics, rail vehicle construction, energy technology and medical technology. They are all said to have increased their share. This reflects trends such as digitalization, energy transition, modernization of infrastructure, and an aging society. Bernhard's conclusion: "The great diversity of customer industries shows that the machine tool industry is fulfilling its role as an enabler."