The German plastics and rubber machinery sector is expected to register a drop in sales of up to 10 percent this year, due in part to a decline in the automotive sector and the "image problems of plastics," according to the German mechanical engineering association VDMA.
The decline marks a reversal in the upward trend registered in the past 10 years, VDMA reported during its annual conference June 14.
In 2018, the German plastics and rubber machinery manufacturers posted a 2 percent increase in revenue, a slight decrease from VDMA's prior estimate of a 3 percent increase.
"Nevertheless, we are pleased about the positive all-year results as in particular towards the end of the year, deterioration of the market became already apparent," explained Ulrich Reifenhäuser, VDMA chairman chief sales officer for machinery maker Reifenhäuser Group.
German manufacturers of plastics and rubber machinery suffered a 1 percent year-on-year decline in orders on their books during 2018, VDMA said, without giving exact figures.
This, VDMA said, marked an end to "the extremely long boom phase of … uninterrupted growth."
In the first quarter of 2019, machinery makers registered a 10 percent year-on-year decline in order books, the association said, linking the fall to "automotive slowdown, image loss and trade conflicts."
The cyclical downturn was due after 10 years of growth, andhas been reinforced by "great insecurity presently prevailing in the automotive sector," VDMA said.
"Investments are virtually at a standstill," explained Thorsten Kühmann, managing director of VDMA. "Companies that are very close to this sales market already perceive this downturn even more intensely. But also, in the packaging sector, use of plastics materials is increasingly being questioned, In this sector, the bad image of plastics today has a major impact."
Furthermore, the latent trade conflict between the U.S. and China is causing shifts in supply chains and insecurity in markets globally.
In addition, uncertainty continues in Europe over the withdrawal of the United Kingdom from the European Union and over "Italy's immense national debt," the association pointed out.
In 2018, Germany's top export destination for plastics and rubber machinery was China, which registered imports of €853 million ($958.7 million), up 19 percent from the year before. The figure marked record sales to a single country.
In addition to exports, German machinery makers also produced more than €500,000 ($562,000) worth of plastics and rubber equipment inside China, making the country "by far the most important overall market."
Exports to the U.S. fell 3 percent year-on-year to €820 million ($921.7 million) in 2018, placing the country in the second position after three years of leading the table.