Germany’s Plastics and Rubber Machinery Industry Reflects on 2020

A contracting market collided with a global pandemic in the first quarter of 2020, before both gave way to booming demand, materials shortages and a significant jump in equipment orders. The German Plastics and Rubber Machinery Association (VDMA) released full year order data for 2020 showing hopeful signs that Germany, the world’s largest maker of plastics processing equipment, has rebounded from the slowdown of 2019 and coronavirus shutdown of 2020 to carry momentum into 2021, despite shortages in some key materials and technologies.

“After a difficult start, which was characterized by major challenges including a lockdown, incoming orders showed a rapid increase from the summer onwards,” Ulrich Reifenhäuser, VDMA chairman said in a statement. Packaging and medical markets, spurred by the pandemic, initially propelled the market, which was further spurred by the awakening of the automotive sector and a continuously strong construction segment.

In the end, 2020’s incoming orders were up 7% over 2019, while sales in 2020 were ultimately down 12% compared to 2019. In the first four months of 2021, however, order intake was nearly double the same period of 2020, while sales have also stabilized, rising 8%. In the end, 2019 German production dropped 10.7% from Euro 7.824 billion to Euro 6.987 billion. Mold and die production fell further, contracting 16.8% to Euro 1.994 billion.

Lingering Supply Chain Issues

Thorsten Kühmann, managing director of the VDMA, did note that ongoing supply chain problems, both for resin as well as components and materials for machinery, continue to have an effect on the market. “In particular, the bottlenecks in the supply of plastics—which is impacting the willingness on the part of manufacturers to invest—as well as in the sector of metals and electronic components, could soon lead to the paradoxical situation of machine manufacturers having to curb production despite full order books,” Kühmann said.

U.S and China Top Export Markets

Overall exports by German plastics and rubber machinery manufacturers fell 11% in 2020, but deliveries to the U.S. actually rose 8%, reaching a value of Euro 863 million. That once again made the U.S. Germany’s top export market, swapping spots with China, which saw imports of German equipment shrink 3% in 2020.

Domestically, VDMA member companies actually performed better in 2020 than 2019, with orders only down 7% vs. 12%. Capacity utilization was also higher in 2020 despite the pandemic, reaching 91% last year versus 82% in 2019.

Record Results for 2021?

Incoming order volumes have led the VDMA to forecast a sales increase of at least 10% in 2021, with many member companies expecting record results. Looking forward for Germany, the VDMA forecast growth of 5 to 10% in 2022, with the potential to reach pre-crisis levels this year or by 2022 at the latest. Comprised by more than 200 companies, 90% of which come from Germany, the VDMA also has members in Austria, Switzerland and France.

Engel and Wittmann Battenfeld Offer Outlook

Two of those Austrian companies—Engel and Wittmann Battenfeld—also recently weighed in on 2020 and offered a 2021 outlook. During a May virtual event, Michael Wittman, managing director of Wittmann Battenfeld, said his company experienced a strong recovery starting in the middle of 2020 with strong demand carrying through the first quarter of 2021. “We’ve reached record highs we’ve never seen before in our history,” Wittmann said during the digital press event.

Wittmann said that growth was seen across all industries, including automotive, which had struggled as OEMs and the market determine what will be the dominant drive technology going forward. The company also witnessed the material shortage that was impacting processors, causing a “cooling down,” which Wittmann Battenfeld partially welcomed as it allows the company to chip away at its backlog and keep more normal lead and delivery times. Going forward, Wittmann said the company believes 2021 revenue could range from Euro 350 to 400 million, depending on those supply chain challenges. Regardless, he said the company was on track for 30% growth in 2021.

In a press conference during the company’s live e-symposium held in June, Stefan Engleder, CEO of Engel said the company’s order log had returned to levels not seen since 2018. That’s despite similar supply bottlenecks, described by VDMA and Wittmann Battenfeld.

In the 2020-2021 fiscal year, the company generated Euro 1.1 billion euro in revenue. For the current fiscal year, Engleder demurred when asked to forecast results, although he does anticipate growth.

“In the past, it would have been much easier to give a forecast of what our planned turnover would be for the current fiscal year,” Engleder said in the press conference, “but to be honest, it’s a little bit difficult now because we all don’t know how the pandemic will go in the next couple of weeks and months.” In particular, whether the pandemic produces another “wave” in the fall could have an impact, but despite that, Engleder was bullish on 2021.

“Any increase below 20% would be a real disappointment,” Engleder said. “We assume we’ll grow by 20% or even more.”