FRIEDRICHSHAFEN, GERMANY (Nov. 10, 11:55 a.m. EST) — This year, the United States could lose its long-time position as the No. 1 export market for German-made plastics and rubber machinery — to China.
China already has surpassed France to take the No. 2 spot in 2002, according to VDMA, the German Plastics and Rubber Machinery Association. Last year, China gobbled up 339 million euros' (US$320 million) worth of the German equipment, or 11 percent of total exports. The United States remained the top export country, buying 13 percent of total exports, worth 402 million euros (US$380 million).
But that was last year. The U.S. market has been stagnant, while China booms, according to Bernd KnÃ¶rr, VDMA's managing director.
“We're not happy about that — but what we expect in 2003 is maybe the exports to China will overtake the exports to the United States. That means China will take the No. 1 place in 2003,” KnÃ¶rr said at the Fakuma show, held Oct. 14-18 in Friedrichshafen.
One example of the mega-orders coming out of China is the 400-extruder order by Dalian Shide Plastic Industry Co. Ltd., which makes profiles and pipe. Of the total, 240 extruders will come from a German company, Munich-based Krauss-Maffei Kunststofftechnik GmbH.
Another big change has been the ascension of Russia to the seventh-largest export market in 2002, from 14th place the year before.
Overall, VDMA is upbeat about German machinery in 2003. In July, the association was predicting that machinery would increase 5 percent, at best. But in October, VDMA upped that figure to 8 percent.
At Fakuma, KnÃ¶rr said it is too early to analyze different machinery segments, such as injection molding machines, extruders or blow molders. “But I think all of these segments will have positive figures, at the end of the year,” he said.
VDMA is predicting 5 percent growth in 2004.
Exports are critical to German plastics machinery makers, accounting for 75-85 percent of all production. Despite VDMA's optimism, the strong euro is causing some worries, since it makes German-made machines cost more in noneuro-zone countries.
The euro has rocketed ahead of the U.S. dollar this year, hitting levels not seen since soon after it was introduced in January 1999 as the common European currency. During Fakuma, 1 euro was worth $1.15.
German machinery makers are able to mitigate that ratio with financing deals and other methods, such as dealing in dollars with U.S. customers. But a recent VDMA study said if the euro continues to gain, it could hurt exports.
“This is the threshold. At $1.15 per euro, the situation becomes very difficult for the machinery industry,” KnÃ¶rr said.
Another big factor for companies that assemble machines in Germany is the reform effort led by Chancellor Gerhard SchrÃ¶der. On Oct. 17, the German Bundestag narrowly approved the package of social and labor-market reforms, which includes cutting Germany's generous benefits for unemployed people and changes how the government regulates welfare, pensions and education.