Atradius reports mixed picture for global machinery industry
Wednesday, 07 October 2015
A new report by leading trade credit insurer Atradius highlights the highs and lows in the global machinery industry.
Atradius is a key partner to many UK businesses not only providing protection from the risks of trading both domestically and overseas but crucially giving access to market intelligence to enable informed decisions for businesses as they tread the difficult path to grow their order book and their bottom line.
Atradius’ latest Market Monitor report focuses on the machinery industry and analyses the performance and outlook of the industry around the world. The Atradius report is an essential tool for any UK business operating in this sector and wishing to benefit from opportunities beyond the UK.
Jason Curtis, Commercial Director for Atradius UK, said: “We are seeing increased demand in sectors where we can see positive opportunities for growth. The immediate outlook for the machinery sector in most countries is ‘good’ or ‘fair’, but, the picture is mixed and it is always important for exporters to research sub-sectors in detail to ascertain where the real opportunities and risks lie. Looking at the machinery sector, on the positive side, we have the main machinery producers and markets of Germany, Japan and the US which are all performing well. In addition, market performance in France and Italy is currently being boosted by domestic recovery and increased demand from the automotive sector, while in the Czech Republic and Hungary machinery industries are benefiting from the rebound in the European car industry.
“However, in contrast, in the emerging markets of Brazil and China the industry faces more challenges, despite some years of high investment in engineering equipment. The slowdown in economic growth in China is well publicised and in Brazil the risk of recession is real. As the fortunes of those engaged in the production and sale of machinery depend crucially on the well-being of the businesses and industries for which their machines are designed underlying economic pressures have a significant impact and cannot be overlooked.
“Looking forward, even well-established machinery players from developed markets need to be taking steps to adapt to the changing global competitive environment. For instance, international competition from Chinese machinery builders – who are increasingly capable of producing high quality machines – are forcing other countries to compromise on price and we have seen evidence of this in the German machinery business where profit margins have recently decreased.
“The mixed economic picture across the globe in the machinery sector sees some countries more attractive to trade with than others. Therefore, we urge exporters in the industry to remain alert to the trading status, economic performance and payment risks in the countries with which they want to export. Again, it is worth reminding exporters that they need not face these challenges alone, trade credit insurers and other partner organisations can offer help and advice”
Key findings from the Machinery Market Monitor, which is available for free download to businesses on the Atradius website:
• Deterioration across all subsectors
• Servicing debts becoming more difficult
• Increasing payment delays and insolvencies
• Lower demand and overcapacity
• SMEs face financial troubles
• Slower payments and more defaults
• Growth driven by automotive rebound
• Poor payment behaviour linked to construction
• Insolvencies expected to level off in 2015
• Economic recovery boosts sector
• Automotive lifts sector
• Strong competition in textiles and printing
• Non-payments expected to decrease further
• Demand to improve in H2
• Low oil price may adversely affect buyer industries
• Demand from automotive sector and exports
• Stable profit margins
• Construction suppliers face more payment delays
• Lower margins due to increasing competition
• Machinery insolvencies to decrease
• Subsectors still face problems
• Good growth prospects in 2015 and 2016
• Profit margins expected to increase
• More caution advised for smaller businesses
(Source - Atradius Press Release)