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Fluctuations of production and sales of German machinery industry

Production and sales of machinery industry showing intensifying fluctuations after the crisis 2008/2009

In the last fifteen years much has changed in the course of industrial production – structurally changed. Four structural changes has already been starting in 2000, a fifth one is related to the process of crisis overcoming. This report adds a sixth one, the increasing fluctuation range regarding production and sales in machinery industry.

April 19th, 2017 - The chart shows the monthly production index from 2000 to 2017. The three vertical arrows illustrate how production’s fluctuation ranges have been widening since the last world economic crisis.

Production of German machinery industry from 2000 to 2017.

Which lines does the chart show in detail?


The red oscillating lines indicate the index of monthly production. Amid these production lines lies the dark line of the moving yearly average of production. This line climbs from the crisis low, drops again in 2012/2013 running flat since then – so production is stagnating in its up and down. This is already analyzed by a separate trend report.


The pink-colored lines illustrate the larger fluctuation range of production. They are situated to both sides of the average value in a distance of two standard deviations. This construction is well-known as Bollinger Bands. This means for our context: The larger the distance of the pink-colored lines from the average value, the larger is production’s fluctuation range from its average value.


The three vertical arrows becoming ever longer, the fluctuation range is becoming clearly larger after the world economic crisis than before it - and this with stagnating production.

 

  • Larger fluctuation range with stagnating production - that is just as new as the fact of stagnation after a crisis, which is usually followed by a boost.  


Why it is like that?

To the reasons of a larger fluctuation range with stagnating production of machinery industry

First it is the situation of the worldwide industrial production that reflects itself for the machinery industry, which the report indicates for the fifth structural change in such a way:

  • “In place of a general upward business trend for the overcoming of an economic crisis a non-uniform process of the crisis overcoming has emerged during which growth, stagnation and decreases of the industrial production co-exist producing a stagnant total tendency by interaction with industrial production swinging up and down around this level for some time and in different countries.”


This covers the stagnating total tendency with fluctuations upward and downward but not yet the increasing fluctuation ranges (at stock exchanges well-known as volatility).


It belongs to the bases of these increasing fluctuation ranges:

  • The stagnating total tendency of the world economy is expression of sinking profit margins in particular for capital-widening investments. That is the reason to restraint investments and demand for machines.

  • Against this background competition regarding selling machines has been getting fiercer. So with production stagnating successful orders as well as lost orders providing a stronger impact than with increasing production.

  • Under these complicated conditions companies are throwing the towel, which others take up intensifying likewise the fluctuations.

  • The emerging countries are losing more and more their character as developing country becoming like China world market-influencing global players. This opens up both larger new and lost orders intensifying fluctuations.


To the effects for the machinery industry will belong to increase the third-party share of production, to widen the product portfolio and to strive after a leading market position or to strengthen it.

Fluctuation range of monthly sales scaled up to €8bn

The fluctuation range of sales has scaled up to €8bn after the world economic crisis 2008/2009. That indicates the following chart at a glance.

Sales of German machinery industry from 2000 bis 2017.

Sales are growing slightly – a fact, which would actually speak for a removing fluctuation range. Instead it is enlarging with slightly increasing growth.  


In euros the fluctuation range was approx. four billion euro after the world economic crisis from 2001; it has been increasing to seven billion euro after the last world economic crisis 2008/2009 and then to eight billion euros - the double of the value from the year 2011.


To the reasons specified the price war comes up, to what extent the customer of German machines requires higher function variety and higher efficiency and to what extent he is also determined to pay for them.

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