With its future-oriented technologies, mechanical and plant engineering is an enabler of the diverse transformation processes in industry and society. In order to advance the transformation, companies need investment-friendly and competitive framework conditions, such as rapid approval processes or a lean bureaucracy.
According to a current VDMA survey in which 700 member companies from mechanical and plant engineering took part – 165 of them from North Rhine-Westphalia – three quarters (76 percent) of the companies rate the urgency of reducing the burden of bureaucracy as “very high”. Another 21 percent describe it as “high”. This means that in the ranking of necessary improvements, the reduction in bureaucracy is ahead of the availability of qualified workers and energy prices.
“Mechanical and plant engineering is not only dealing with falling demand and a shortage of skilled workers, but is also suffering from the effects of a variety of challenges, such as the implementation of EU regulations, excessive bureaucracy or a lack of planning security. These are all factors that have a negative impact on the competitiveness of our industry,” explains Hans-Jürgen Alt, Managing Director of VDMA NRW and adds: “For example, regulatory projects should also be measured by their impact on competitiveness.”
2024 will not be an easy year
The global economy is currently going through a phase of weakness, the duration and intensity of which cannot yet be estimated. Due to lower incoming orders, the VDMA NRW has set its real production estimate for 2023 at minus 2 percent – a production decline of minus 2 percent is also expected for 2024. Due to ongoing inflation, the production forecast paints a more realistic picture than a non-price-adjusted sales forecast, which is distorted by the inflation variable.
The current global uncertainties are putting a strain on North Rhine-Westphalian mechanical and plant engineering companies and are causing persistently weak new orders. Companies are currently still benefiting from their order buffers, which are, however, declining due to falling new orders. 58 percent of companies currently have a lower order backlog than the long-term average. 23 percent of companies say that the current order backlog cannot support production in the coming year, and 45 percent say “not much support”. Accordingly, there is a cautious sales expectation, which must be seen against the background of inflation: 39 percent of those surveyed in North Rhine-Westphalia still expect nominal sales growth. 21 percent of the companies surveyed expect stagnation in the coming year. However, 41 percent expect a nominal decline in revenue for 2024.
One bright spot is that the bottlenecks in the supply chains have eased significantly. The majority of respondents from North Rhine-Westphalia see no restrictions there (18 percent) or only minor restrictions (60 percent). Companies do not expect the situation to worsen in the next three months: only 4 percent of those surveyed expect supply chain problems to increase, 76 percent expect the restrictions to remain the same and 20 percent expect the situation to improve. The problems with the procurement of electronic parts or components are particularly pronounced. 43 percent of those surveyed rated these problems as serious or noticeable.
Skilled labor shortages are becoming increasingly burdensome
With almost 190,000 employees in around 1,600 companies, mechanical engineering is the largest industrial employer in North Rhine-Westphalia. At the end of September 2023, local companies employed almost 193,000 people in their domestic permanent workforces in companies with 50 or more employees. The search for new skilled workers is increasingly presenting companies with major challenges. Almost all of them, 95 percent of NRW mechanical and plant manufacturers, report problems in finding new employees, and 60 percent even report serious and noticeable bottlenecks in personnel selection. 26 percent of those surveyed fear the situation will worsen in the next three months, while only 6 percent expect it to improve.
outlook
“Despite the difficulties in the international environment and the diverse challenges, we assume that their impact on mechanical and plant engineering and its production will be limited,” summarizes Alt. “As an enabler and source of inspiration, our industry will also find ways here find a successful future