Export share and industrial production in export countries
The export shares of German machines lagging behind industrial production in the emerging markets
After the world economic crisis 2008/2009 machine exports in the emerging markets pointed to the upside that to the USA and the EU to the downside. Since 2014 this shift has been turning back. However, this report shows that industrial production in the merging markets is further receptive to machines. So a changed structure of demand for machines may restrain German machine exports to these countries.
Export shares growing along increasing US industrial production
Update May 2nd, 2018 - The export share of German machines to the USA rises continuously together with the industrial production in the USA.
This signals demand for high performance and highly flexible machines in the USA as provided by the German machinery industry. And the rising export shares confirm a stable competition position of the German machinery industry.
Machine exports to the EU drop 2014 for the first time since 2014 while EU industrial production rising
Since the crisis low 2009 industrial production in the European Union rose until 2011 and again since 2014.
The export share of machines from Germany declined from 2008 to 2013 and increases again stronger than EU industrial production. In 2017, however, export share drops while industrial production of the EU is further rising.
Germany’s machine exports lagging behind China’s growth potential
In the wake of the last economic crisis, China became the largest export market for German machines outside the European Union. 2011 machine exports reached their peak with 11.5%. Since then export share dropped to 8.6% in 2016. In 2017 export share rose again to 9.7%. Since the world economic crisis China's industrial production has been showing steady growth.
Does the demand for high performance and highly flexible machines stagnate in China? Is the competition position of the German machine-builders in China worsening?
A similar picture as in China shows up for Brazil, Russia and India.
German machine exports to Brazil, Russia, and India dropping since 2012
Also here the export share has been dropping in these countries since 2012 although industrial production has been rising in India and Russia while industrial production declined in Brazil only since 2014. 2017 export shares of German machines to these countries increased slightly to 5.7%.
German machine exports do not really benefit from growth in MIST countries
Industrial production grows strongly in Indonesia and Turkey, while it stagnates or grows only slightly in Mexico and South Korea (MIST countries).
The export share of machines from Germany to these countries increased to 6.5% by 2013, however, to a small extent. Since 2014 export share stagnates close to 6%.
About possible reasons
Are export shares that do not keep up with industrial production pointing to a tendency of a changing demand structure for machines? The high performance, highly flexible machines from Germany are particularly suitable for large enterprises, for enterprises producing worldwide a much differentiated product program serving mature markets.
For a fewer differentiated product program one needs machines, which must be only rarely converted or even not at all, machines that are to produce one product at unit cost prices as low as possible.
If this demand structure intensifies on the export markets, orders for the German machine-builders would get lost, superficially having failed due to prices, in fact due to demand for simpler, unit cost price-optimized machines.
The charts make attentive to a problem, however, do not provide the answer that requires further investigation.
