Study advises the German engineering industry to aim at the middle ground
According to a study by Pricewaterhouse Coopers (PwC) Consulting, commissioned by the VDW (German Machine Tool Builders’ Association), the industry should not neglect the middle to high technology end of the manufacturing market.
In its early marketing activities, the AMB International Metalworking Exhibition, to be held in Stuttgart from 18-22 September, 2012, point out its show will highlight series products in the mid-tech range to offer, in addition to high-tech machinery.
German machine-tool manufacturing industry remains buoyant. The market volume in Western Europe, the USA and the BRIC countries is expected to reach 68 billion Euro by 2015. That is more than twice the value from 2010. Over half of this growth is due to China, where the demand for high-end machinery is expected to grow disproportionately. It is anticipated that net sales in the high-tech segment, currently at just under one billion Euro, will reach 2.6 billion Euro by 2015.
"German machine-tool manufacturers are already technological leaders and occupy a correspondingly good position among the competition. To maintain this position, however, they must press ahead with internationalisation. Exporting products alone is not the best way to fully exploit the opportunities for growth in the newly-industrialised countries", advises Martin Kapp, VDW Chairman.
However: The PwC study clearly states that "the full growth potential of ‘tomorrow’s world’ will only open up to those machine-tool manufacturers who also apply foresight and address the middle technology segment in the BRIC markets’.” The study also says that another strategic option that arose from the survey of VDE member companies was that the products developed for the middle technology segment in the BRIC markets can be adapted for export to European and US markets, and be used there for ‘downward market expansion’. Companies have already recognised this, since for most of them, internationalisation is by far the most important topic for the future.
The study reads: "Internationalisation offers larger organisations the opportunity to tap into the mid-tech segment as well as the high-tech, and therefore participate more significantly in growth. Corresponding products can be developed locally and manufactured cost-effectively in the newly-industrialised countries, for instance." It may be advisable for smaller organisations – of which there are a large number in the machine-tool manufacturing industry, since it is largely characterised by medium-sized businesses – "to project themselves as niche providers and focus strictly on exporting high-tech ‘Made in Germany’ products", recommends Dr. Ralph Niederdrenk of PwC.
The study indicates that the current trend is towards mid and high-tech machines, including in the BRIC countries, which up until now have been dominated by low-tech machinery, but where the proportion of mid-tech machines is continuously increasing. "The requirements for component quality and productivity are rising around the world, which means that demands required from machine tools are also increasing." A number of peripheral processes, such as automation, parts handling and deburring operations would be increasingly involved.
The trend is moving towards simple, automated production systems. In line with this, there has been a development away from fully-automated production systems to smaller production cells with simplified automation. This can be traced back to the ever greater diversity of variants, and the associated production in smaller lot sizes. With small and medium series production, simple, automated machines could now be adapted more flexibly to the different workpieces
Customers’ high requirements with regard to the quality of produced parts "does not allow any significant alternatives in the area of costs". As a result, the study acknowledges, it is important to always view the entire process as a whole in order to keep investment costs as low as possible – for instance machines that function without any special foundation and, ever more importantly, are energy efficient.