German machinery exec doesn't expect sharp upswing

CHICAGO (Aug. 6, 11:20 a.m. ET) — German-made plastics machinery was booming in 2007 at the K show in Düsseldorf. Equipment makers reported some shortages of key components. What a difference a year-and-a-half makes, a German machinery authority said at NPE2009.

Germany’s machinery business stayed strong up until the fourth quarter of 2008, said Thorsten Kühmann, managing director of the Plastics and Rubber Machinery Association within VDMA, the German engineering federation. Then the bottom dropped out.

“Things moved very fast after that. A turn to the worst,” Kühmann said in an interview during NPE2009 in Chicago in June.

Even so, 2008 turned out to be the best year ever for German plastics and rubber equipment makers, he said.

But Germany, a country highly dependent on exports, quickly began to feel the impact of the global economic downturn. “We expect for this year, we will have a really sharp decline in the first quarter of 2009. It’s a drop in incoming orders of almost 50 percent compared with the first quarter of 2008,” Kühmann said.

He said VDMA expects German plastics machinery to drop about 40 percent for all of 2009, from 2008 levels, measured in euro value.

Plastics machinery is an important part of the German economy. “The whole machinery sector in Germany is affected very, very strongly by the world economic crisis,” Kühmann said. “I’m sure the whole branch will recover again whenever the whole economic situation worldwide becomes better again. We are still at a very low level. We don‘t presume that it’s going to drop from that level, but we don’t see a really sharp upswing now.”

VDMA is based in Frankfurt, Germany.

The recession has prompted several trade associations representing processors, resin makers and machinery manufacturers to create a German Plastics Industry Federation. The federation includes VDMA’s Plastics and Rubber Machinery Association, PlasticsEurope Deutschland and the German Plastics Converters Association.

The federation issued a position paper on June 18, calling on the German government to make the country more attractive for investments, by cutting bureaucracy and regulations and boosting tax incentives for research and development.

“We are in a really difficult time right now in the plastics industry and we feel that at certain points, it’s really important to pull together and to speak with one tongue,” Kühmann said.