German woodworking machinery sector faces sharp downturn

The German woodworking machinery industry is grappling with a significant slowdown in production and exports, following a record-setting year in 2023. The VDMA Woodworking Machinery Association has forecasted substantial challenges for 2024, citing a marked decline in incoming orders and projecting a recovery by early 2025.

In 2023, the sector achieved a notable production record of Euro 4.2 billion, a 15% increase from the previous year. However, by mid-2024, the industry saw a 23% drop in orders, prompting a forecasted production decline of at least 10% for the year. The situation varies across companies, with some manufacturers working through existing order backlogs, while others have resorted to short-time work due to the order slump.

Despite the downturn, sustainability and decarbonization trends continue to drive optimism for a rebound. “The macro trends of sustainability and decarbonization continue unabated and are even gaining momentum. This means that the prospects for our industry remain excellent,” said Markus Hüllmann, Chairman of the VDMA Woodworking Machinery Association, at the 2024 General Meeting in Munich. Hüllmann anticipates a pickup in demand across the board in the coming year.

Exports, which grew by 10% to Euro 2.7 billion in 2023, fell by 17% in the first quarter of 2024 compared to the same period the previous year. While key markets such as the USA, China, and France showed positive trends, Poland experienced a drastic 50% decline, though Austria maintained consistent performance.

The international competition is becoming increasingly challenging for German manufacturers. Accelerated product development and new solutions for automation and digitalization are essential, but they must be cost-effective. “If you want to be at the forefront, you need to build on your strengths and focus on technologies and topics that generate real added value for customers,” Hüllmann stated. The association advocates for closer collaboration among European manufacturers to develop pre-competitive foundations for digital business models.

The VDMA represents 3,600 German and European mechanical and plant engineering companies, employing around 3 million people in the EU, with over 1.2 million in Germany. This sector is the largest employer among the capital goods industries in the EU and Germany, generating an estimated turnover of 910 billion euros in the EU.

Source: German woodworking machinery sector faces sharp downturn