With the world economy, and particularly machine tool investment, recovering after the financial crash that started in 2007 – signalled in the UK by Northern Rock's troubles and culminating in Lehman Brothers' bankruptcy in September 2008 – the biennial manufacturing technology show, EMO, this year held in Hanover, Germany, will have a much more positive feel about it than did the previous event.
Following massive falls in order intake, global machine tool production fell back severely in 2009. In Germany, for example, order intake turned negative in the third quarter of 2008, hitting almost -70% in the first quarter of 2009, before turning positive again in the fourth quarter of 2009. Germany is Europe's powerhouse for mechanical engineering and machine tools, of course.
According to Gardner Publications' Metalworking Insiders' Report, 2009 saw machine tool output by the 28 leading countries fall by, on average, 32% from the year before. Shipments were $55.2 billion, compared to the $81.3 billion for 2008. The latest report puts 2010 shipments at 21% higher than the previous year, with $66.3 billion worth of machine tools produced globally, against a revised $54.7 billion in 2009. Germany saw a 3% decline in production in 2010, however, so growth, like the pain, was not equally shared.
But already this year, European firms have been lining up to highlight improving conditions. At an event in Schorndorf, Germany, milling, EDM and laser ablation technology firm GF AgieCharmilles noted that business had recovered faster than expected.
At the March event, Jean-Pierre Wilmes, CEO, presented year to date figures for 2011 versus 2010. European demand was growing by 49% – "contrary to any expectation" – with Asia growing at just over 33% and the Americas by 15%. Indeed, Mr Wilmes underlined that German demand was already back to the heights of 2007 (for order intake). And in February this year, Germany's Gildemeister AG's chairman, Dr Ruediger Kapitza, said that he expected orders to grow 20% this year and return to 2008 levels in 2012.
Swiss grinding specialist Studer also reported much improved business in January. The company said it expected to outperform the 20% growth forecast for its market segment this year, winning market share from competitors. Turnover for 2011 is expected to be above the level of 2006, while, for 2012, Stephan Nell, chairman of the board of Fritz Studer AG, offered that turnover would be back to 2007 levels, which was one of "two or three of the best years in the history of the company".
We are not yet out of the woods, of course. Indeed, June figures from Germany's mechanical engineering association VDMA indicate that orders for German machine tools eased in June. Overall, orders for machines were only 2% higher than in June 2010, says VDMA, with domestic orders diving 14%, while foreign demand gained 10%.
It was, says VDMA economist Olaf Wortmann: "The first signs that the investment dynamic in Germany and its Eurozone partners is not as strong."
In the three months from April through June, German machine tool orders gained 14% overall on the previous year, following a leap of 32% in the first quarter of 2011, although the first quarter in 2010 was weak.
But it is Asia, more specifically China, where machine tool demand continues to grow most rapidly. China has been the biggest consumer of factory equipment since 2002, in fact, and, according to Metalworking Insiders' Report, it produced 30% by value of all machine tools last year, while installing $27.3 billion worth. "By value, four out of every 10 machine tools produced anywhere in the world last year went into a Chinese factory," notes the report.
Nearby Taiwan is a major beneficiary of this growth. According to statistics compiled by the Taiwan Association of Machinery Industry (TAMI), Taiwan exported $10.1 billion in machinery in the first half of the year, up 33% year-on-year, reported Taiwan's China Economic News (CENS) website in July. Many of Taiwan's domestic machinery firms have orders enough to "fill production lines throughout the third quarter", the report added. Taiwan ballscrew maker Hiwin reported first half-sales up almost 94% year-on-year, for example.
This business windfall, said CENS, reflects sales to mainland China, ASEAN (Association of Southeast Asian nations), India, Germany and Japan. But the Economic Cooperation Framework Agreement (ECFA) signed between Taiwan and China is a major influence – exports of Taiwan-made machine tools to China rose 43% in the first half of the year, to $820 million. The ECFA is also attracting Japanese machine tool firms to set up in Taiwan.
TRADING PARTNER BENEFITS
So, while business is improving generally, trade accords like the Taiwan-China agreement are key in individual country's or region's relative success.
For Europe's machine tool builders, for example, the EU-South Korea Free Trade Agreement (FTA), which came into effect on 1 July, will benefit machinery makers to the tune of €450 million a year in saved duties. Machinery represents over 26% of the EU's exports to South Korea.
Taiwan, incidentally, is concerned that it is not included in any current EU FTA plans. The EU was expected to conclude a pact with Singapore last month, while negotiations are underway with Malaysia, with talks set to begin with a number of other Asian nations in the near future. So the global business backdrop for EMO 2011 looks positive, although some caution must be exercised, of course, as, while the finance sector debt crisis has passed, we have moved now to sovereign debt issues and the effects of government spending reductions.
The following 10 pages offer a technological snapshot of EMO, although, with about 2,000 companies from 38 countries exhibiting, according to the show organiser, it can only be the tip of the iceberg (to view these 10 pages, download the complete Machinery issue here
With Germany being the host nation, the environmental sustainability push, called Blue Competence and initiated in 2010 by German machine tool builders' association VDW but now run by the VDMA, a wider mechanical engineering association, is likely to get an airing. Certainly there are exhibitors pushing their energy-saving credentials. Workholding specialist Roemheld and chuck and workholding specialist Kitagawa will count among their number, for example.
On tooling, there will be a plethora of developments. Sandvik Coromant, for instance, is to reveal what it claims is the "the fastest solid carbide drill on the market". LMT is claiming a 'world first' in thin-film coating technology with Protec, which will positively affect the process of thread rolling. Developments in composites and titanium machining will also be prominent, both at the tooling and machine tool level. For example, the Machining Innovations Network (Hall 27, Stand C32) will be showing up-to-the-minute highlights and milestones in metalcutting production technology for aircraft structural components made of titanium.
Related to the increased requirement for titanium machining, look out, too, for CAM system developments that deliver more efficient NC code and strategies. You'll find such advances on the stands of both Open Mind and SolidCAM (Machinery articles http://bit.ly/piM3zv and http://bit.ly/gAXg2k).
But the most impressive display at the show, in terms of sheer volume, will be hall 2, where Gildemeister AG sales organisation DMG and partner Mori Seiki will collectively display some 100 machine tools covering 7,300 m2. Even the 26-strong machine display by the world's largest metalcutting machine tool firm, Yamazaki Mazak, pales beside this.
EMO – if you use manufacturing technology, it's a show not to be missed; certainly not this year.