FRANKFURT, Germany—If 2019 was unfriendly to the German rubber and plastics machinery sector, 2020 has been just plain rude.
Last year, the industry experienced a 6 percent decline and had braced for a challenging 2020. But lingering trade disputes and political upheavals were exacerbated when the COVID-19 pandemic brought bigger challenges than anticipated, according to the VDMA, a German rubber and plastics machinery association.
"The pandemic was the stab in the back for customer industries that had already been performing badly," VDMA Managing Director Thorsten Kuehmann said in a statement.
In the five months to end of May, overall orders plummeted by 20 percent, with all markets registering negative trends, VDMA said.
The German market alone saw orders fall 21 percent, while international exports declined 20 percent, reflecting 3 percent decreases in exports to both China and the U.S.
The news about export declines in China and the U.S. comes with both good and bad implications. The good news is that the Chinese market appears to be more favorable. The bad news? The decline in U.S. demand "is only the beginning," VDMA said.
Deliveries in Europe have fallen sharply as well, with Italy, France and Spain showing declines of 31 percent, 42 percent and 48 percent, respectively.
Exports of machinery to India, meanwhile, plunged 73 percent in the first five months of the year, VDMA said. It did help, however, that during the same period, Russia and Turkey imported German machinery "over-proportionally." Those two markets registered year-on-year increases of 28 percent and 102 percent, respectively.
The main reason for the drop in global demand is the automotive sector's slowdown and sluggish return. At the same time, the medical engineering and packaging sectors' demand are helping to buoy the industry in the choppy and uncertain waters of the COVID-19 pandemic.
For VDMA, the biggest concern remains: a second wave of COVID-19 infections. That looming threat presents additional challenges for the automotive industry's recovery and is compounded by the U.S.-China trade war and plastics taxes, among other things. In view of the market situation, VDMA said, the majority of rubber and plastics machinery makers expect a turnover decline of up to 30 percent in 2020.
And recovery isn't likely any time soon. According to VDMA data, 80 percent of machinery manufacturers don't expect their industry to return to 2019 levels until at least 2022.