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
March 24th, 2016 - 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 again more increasing than EU industrial production
Since the crisis low 2009 industrial production in the European Union rose until 2011 and stagnates since then by and large.
The export share of machines from Germany, however, continuously declines from 2008 to 2012 and has been increasing more strongly than industrial production in the EU since then.
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 has been dropping to lastly 9.4% while industrial production has been continuously growing.
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 in these countries since 2012 although industrial production has been rising in India while industrial production in Russia declined only in 2015 and in Brazil only in 2014.
German machine exports do not really benefit from growth in MIST countries
Industrial production continuously grows in Indonesia, Turkey and Mexico while it declined only in South Korea in 2015 (MIST countries).
The export share of machines from Germany to these countries increased to 6.5% by 2013, however, to a small extent. In 2014 a clear decrease occured that was not settled in 2015.
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.
