Results of the Machine Tools and Forming Machines Industry
Petr Zemánek, Association of Engineering Technology, www.sst.cz
Manufacture of machine tools and forming machines has certain specificities due to which an economic recession, whatever its roots may be, and the subsequent recovery always come slightly later, and thus do not precisely reflect the trends of the overall national economic development. Major reasons include the relatively long production and delivery times of machines and the long-term planning for ensuring full-capacity operation of plants, including the financing of this approach.
Production and export statistics for Czech machine tools and forming machines for recent years clearly paint the picture of a multiple-year growth, starting in 2005, and the subsequent slump in 2009 when compared to the previous years of boom. As can be seen in the attached charts, exports had been growing gradually until 2008 when the maximum in the amount of CZK 14.62 billion was reached. The economic crisis caused a slump of almost 25% in 2009 – machines valued at CZK 11.185 billion were exported that year. 2011 already showed growth in both export and import, with export increasing by 20.1% compared to 2010. The value of exported machines reached CZK 12.741 billion that year. The growth is even more apparent in the import category. Machines valued at CZK 8.465 billion were imported in 2011, which means an increase of 60.5% over the previous year.
Results of the machine tool industry for 2011 and for the first quarter of 2012, as well as orders at full capacity until the end of 2012, indicate continuing record exports. This development is the result of efforts by Czech exporters to adapt the focus of exports to the current situation on the international market, which has not been very easy until recently.
Despite the fact that Europe is still fighting lingering problems, especially in the banking sector, which have been the root of the crisis of the Euro and of the significant decline in investment activities, Germany remains the most important destination for machine manufacturers. If we were to look at the situation from the German point of view, Czech companies have taken the very proud 4th place among other importers. German export and import has traditionally hovered just below 30%. There are no significant fluctuations in year-on-year comparisons, rather between quarters within the same economic year.
Important Markets for Czech Manufacturers
However, it must be said that the shares of Russia and China in Czech export have been growing significantly. Russia is gradually becoming the most promising market for machine export. The need to replace engineering equipment in reconstructed and newly built Russian enterprises has increased considerably. This market is also interesting for Czech manufacturers, because Russian partners have an increasingly clearer idea of what types of machines and what technologies they need, which represents a significant incentive for business cooperation. Chinese companies ever more frequently demand large and non-standard machines, mainly because they are already capable of supplying regular, universal machines from their own production to their domestic market. They have even achieved a dominant position among Asian competition.
Slovakia still holds its position as one of the four most important destinations of Czech engineering export, which is undoubtedly based on relations surviving from the time when we were a single country. A special position is occupied by India, which shows a great absorption potential, but presents a relatively complicated market when it comes to processing orders. As opposed to China, India has a decentralised market, which makes it more complex. Poland and Ukraine are also interesting markets that can surprise by realising enormous orders, as well as by the laboriousness of small business cases.
The second and third places in imports are occupied by Japan and Austria. However, imports from Taiwan and South Korea, which offer large machines at attractive prices, have been increasing for several years now.
The above comments imply that the foundation of success for Czech engineering companies has definitely been the fact that, in good time, they have been able to pick up the trend of moving export destinations from Europe to dynamically developing territories whose markets show a strong absorption potential. It was no less important to learn the mentality of, in our eyes, often exotic partners with vastly different cultures that also influence business negotiations. As it is, current clients are very demanding: they demand quality products, modern technologies, acceptable prices, and perfect service. It is necessary to remain competitive in all of these areas.
Supplement of Czech Business and Trade 3-4/2012