VDMA: German Industry Records Upsurge

June 23, 2011

The VDMA (German Engineering Federation) has noted an upsurge in orders for German marine equipment and offshore suppliers, despite a six percent drop in sales in 2010.

“We continue to be successful in world markets and have also found new customers in attractive niches in 2011. At the same time, our regular customers are now...ordering not only in the newbuilding segment, but...in the retrofit area,” stated Dr. Alexander Nürnberg, Chairman of VDMA Marine and Offshore Equipment Industries, at the association press conference held in Hamburg on Wednesday. “2010 was a difficult year for marine equipment suppliers in production, as there were few new orders from shipbuilding in 2009. Nevertheless, we have retained our staff. We now see a slow but steady recovery in the order situation in global shipbuilding. The versatile focusing last year on R&D, service and sales is having a positive effect, but at the same time worldwide competition is becoming fiercer – we must expand new and also traditional market segments and convince customers with our reliability and speed,” explained Nürnberg, “Quality is good, but is no longer a unique selling point. Customers are looking for solution and system expertise with very short delivery times. That is leading to fresh challenges for companies, and we are gearing up for these in order to defend our title of world market leader for marine equipment supplies also in 2011.”

Sector sales €11.1 billion (nearly $15.8 billion) with export rate of 72 percent in 2010 German marine and offshore suppliers generated sales of €11.1 billion with 70,000 employees in 2010. There was a slight drop in sales of 6percent on average compared with the previous year (decline in sales in 2009: 7.7 percent). Capacity utilization in production among marine equipment suppliers continued to improve. Short-time work is a thing of the past in most companies. The offshore supply business in the oil and gas market was not affected by the slump in sales and continued on the growth track as in recent years.

Change in trend with many more incoming orders
Incoming orders recovered by 8 percent in 2010 following the dramatic slump in shipbuilding orders from October 2008 and the drop of 29 percent at suppliers in 2009. The trend thus seems to have been reversed and slight sales growth can be expected for 2011. The sector has coped by itself with the shipbuilding crisis and expects to achieve continuous, modest growth in the next few years.

Opportunities in new export markets
Marine equipment and offshore suppliers have concentrated on developing new export markets in addition to benefiting from the slowly increasing orders in established areas. The VDMA delegation trips in 2009 and 2010 were successful and are being continued at the same high level in 2011. The experience gained is being discussed at specific specialist events and benefiting the sector.

Emerging shipbuilding giants such as India, Brazil and Russia are coming to the fore in the wake of the top trio of Asian shipbuilding countries China, Korea and Japan. In 2010, 2,780 oceangoing vessels were again ordered worldwide (previous year: 1,599) with 928 (605) in China, 464 (140) in South Korea, 385 (281) in Japan and 173 (89) in the EU-27, including 21 (7) in Germany. Orders on hand for ships worldwide
declined again last year, from 9,226 vessels to 7,822.

China still largest foreign market
The main foreign markets for German suppliers in 2010 were in Asia (35 percent) and other European countries (33 percent). China is the largest foreign market, accounting for 21 percent of exports, trailed by Korea
(9 percent).

The sector continues to closely monitor Asian countries’ efforts to expand local suppliers. German firms are thus aiming to retain their existing edge in the technical and logistics area and improve on this with innovations. Know-how protection continues to become more significant, also within joint ventures with local partners in Asia.

Outlook for offshore
German suppliers are continuing to step up their involvement in the offshore oil and gas industry that they have been displaying for several years. Christoph Daum at MENCK GmbH (Kaltenkirchen): “Demand for high-quality, reliable equipment is high. Availability, dependability and high environmental and safety standards are crucial competitive advantages of German companies in this respect. A system leadership, as frequently called for in the political area, is not a prerequisite for longterm success in this very international business.”

Offshore suppliers are active in the oil and gas area as well as the offshore wind segment. Here there are synergies that favor “learning from one another” and therefore add to the attraction of Germany as an industrial location. The VDMA is thus also actively promoting networking among its members between these two maritime segments.

Energy efficiency is German core know-how
A further focus of German suppliers is energy and cost saving and at the same time the environment-friendly operation of ships and offshore plants. In this respect, German high tech industry has an outstanding reputation to defend with its technological edge. “The developments with drive trains and in particular engines are excellent examples here,” commented Klaus Deleroi, MAN Diesel & Turbo SE (Augsburg), “as only technology leaders with system expertise are able to optimize the various emission values during the entire lifecycle of an engine. In this process, we certainly have to take into consideration the flexible deployment scenarios. By doing so, we help the customer meeting statutory requirements worldwide and give him a crucial advantage in terms of cost-efficiency and environmental protection.” An interesting business area is also developing here for the retrofitting of older ships to ensure an immediate improvement in their efficiency and environmental compatibility.

Companies and employees need to be highly flexible
As VDMA forecast exactly a year ago, the workforce with 70,000 employees could be largely retained. There are currently shortages of qualified employees again, as other industrial areas are also booming and the demographic development in Germany is beginning to make its presence felt. “Thanks to our well above-average training rate and the support of the dual study courses, we are confident about the future,” commented Dr. Alexander Nürnberg. He added: “We ask a great deal from our employees. Our reliable personnel policy, our optimism and our top teams in the often owner-managed companies will give us the suitable young talent to master the challenges in the global market with its ever shorter cycles.” Precisely for the small or medium-sized marine equipment and offshore suppliers, the flexible, breathing company is the prerequisite for survival on the world stage.

Source: VDMA Press Release

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