^ China is the largest export market for Germany’s valve industry.

Article By Lucien Joppen

According to VDMA, who represents the mechanical engineering industry in Germany, the production of industrial valves in Germany has flourished the last couple of years. The statistics, provided by VDMA, show that between 2013 and 2018 sales figures have been more or less stable: in 2013 total sales were approximately 3,6 billion euro, after which sales slightly dipped, only to go up in 2018 to 3.658 billion euro.This year, VDMA expects total sales to up with 2 per cent.

The association bases this prediction on a sales plus of 1 per cent and an increase of 7 per cent in orders in the first half of 2019.

Downward forecast

“Given the emerging global downturn, the weak growth in the first half of the year is hardly surprising. Especially since major sales markets, such as the chemical industry, have recently significantly revised their forecasts downwards,” comments Wolfgang Burchard, Managing Director of the VDMA German Valve Manufacturers Association, on the current situation. “Nevertheless, the sector is still holding up well compared to other branches of mechanical engineering and a 7 per cent increase in orders in the first half of the year (compared with the same period in 2018) gives reason to hope that business will pick up in the second half of the year.

Temporary dip on the home market

Looking at the performance on the domestic and the export market, it has become clear that German manufacturers struggle on their home turf, with a sales decline of 2 per cent. The VDMA states that this dip could be attributed to the current uncertainty of the German industry and a chemical sector that is struggling a bit. Order figures from the first half of 2019 suggest that this dip seems to be temporary, the VDMA says.

However, the export market is a different story: foreign sales increased by 3 per cent. The eurozone in particular contributed to the positive result with an increase of 4 per cent. Outside the eurozone, the increase in sales was 2 per cent.

In terms of industrial valve type, the individual product groups developed very differently in the first half of 2019 (compared with the first half in 2018).

While control valves grew by 8 per cent, business with shut-off valves stagnated, and sales of safety and monitoring valves even shrank by 7 per cent.

China and the US markets remain buoyant

Germany’s strong performance in the export market is a blessing for the sector. In the last five years, German valve manufacturers have increased their export sales figures. Whereas in 2013, the total industrial valve export amounted to approximately 3.5 billion euro, export figures rose steadily to 4.2 billion euro in 2018.

In the first six months of 2019, German industrial valve manufacturers delivered goods worth 2.2 billion euros abroad, corresponding with an increase of 3.3 per cent compared to the previous year.

It is quite remarkable that the most substantial export destinations, China and the US, have performed very well. Exports to China rose by 5.0 per cent to 260 million euros in the first half of 2019 and exports to the United States increased more strongly (9.5 per cent to 216 million euros).

Trade disputes and Brexit

It remains to be seen whether German manufacturers can increase sales in the markets mentioned above. According to the VDMA, the “outcome of the trade disputes between the USA and China is likely to be decisive for further development in the important Chinese market. If the conflict escalates, the economy in China and the region’s closely interwoven economies will continue to grow at a slower pace until further notice. At the same time, the threat of hard Brexit and the government crisis in Italy are dampening prospects in Europe.”

Despite the above uncertainties, the VDMA remains mildly positive about the export market, mostly based upon the orders placed in the first half of 2019. “Manufacturers expect growth impulses in the coming months, particularly in the food industry, oil & gas, pharmaceuticals and cryogenic technology sectors.”

The US has been able to continuously expand its position as the second most important customer country of the German valve sector in recent years. This development is also a result of the resurgence of the American chemical industry in the wake of the shale gas boom. France also performed well (+9.7 per cent). With a purchase volume of 121.6 million euros, the country maintained its position as the third most important sales market. 

Absent in Germany’s export top 10 is Russia. This country has been an important export market in the past, but this position has been lost due to trade restrictions and also to the made-in-Russia only politics and the rather slow development of the Russian industry. “Depending on the general development of the Russian economy, the market could gain more importance again,” the VDMA states.

Covering 90 per cent of the German sector

* Source: VDMA, 2019. The VDMA-figures are based upon monthly surveys among its members (covering 90 per cent of the German sector) plus estimates based on figures of the German Statistical Office.
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