24You

The new online banking of Bank Austria.

OnlineBanking & BusinessNet

The familiar online banking for private customers and companies.

12.11.2010

Sector Report by Bank Austria Volkswirtschaft:
Mechanical engineering returns to high of growth

 

  • Output capacity declined by 22 per cent in 2009, revenue in the sector dropped 24 per cent to EUR14.7bn.
  • Upturn  increases; following production growth of 8 per cent in 2010, production will increase by 10 per cent in 2011
  • Export demand drives upturn and emphasizes the strong competitiveness of the Austrian mechanical engineering industry

The Austrian mechanical engineering sector had to face huge losses in the year of recession in 2009. Output capacity declined by 22 per cent, revenue dropped by 24 per cent to EUR14.7bn. The sector will be able to compensate for the decline, which was by far higher than the industrial average, in 2012 at the earliest. Nevertheless, the sector will soon become one of Austria’s fastest-growing branches of industry again. This is the result of the current sector analysis made by Bank Austria Volkswirtschaft.

Producing capital goods, the mechanical engineering industry reacts to economic recovery with delay. Production started to increase as of May only but has accelerated considerably to more than 10 per cent in the past few months. Also if upturn loses its dynamic development by year’s end since customers’ deposits are full and the economic programmes are exhausted, an increase in production of about 8 per cent on average in 2010 will expectedly be possible, as indicated by a high order backlog and optimistic production estimates. Günter Wolf of Bank Austria Volkswirtschaft says, “Based on the assumption that recession-related investment gaps can be closed in many fields, production growth in the mechanical engineering industry will accelerate to 10 per cent in 2011.” Export demand once again is a driving force in 2010, leading to an increase in machinery and equipment exports of 6 per cent until July. Demand for machinery and equipment in Austria, however, still is restrained.

The mechanical engineering sector even consolidated its position as Austria’s most important export industry in the year of recession in 2009 when machinery exports as well as imports fell 25 per cent each. In the end, the export surplus for machinery and technical equipment is EUR3.5bn with exports worth EUR12.5bn and imports worth EUR9bn. The sector’s export surplus constantly rose from EUR100m in the early 1990ies to a preliminary record of EUR5.4bn in 2008 although market shares in the field of standard products were lost to competitors in Eastern Europe and Southeast Asia. “To put it in simpler terms, domestic mechanical engineering companies manage to stand out against competitors, which have cost advantages only, with high-quality special machinery”, Günter Wolf explains.

“Not only prospects for 2011 but also the industry’s long-term prospects are positive. Austria’s mechanical engineering companies will be able to stand out in a positive way against the industry’s economic cycle on European level in the future as well”, says Bank Austria economist Günter Wolf. Mechanical engineering companies manage to secure their competitiveness with a high level of innovation and a superior product portfolio. According to an innovation analysis by the EU, the sector is among the most innovative branches of industry in Europe. The mechanical engineering sector, which contributes nearly 3 per cent only to the national economic value added, accounts for around 8 per cent of all R&D expenses in Austria.

The sector’s constantly high production gains, an indicator for its competitiveness, have also prevented an erosion of profits in the past few years despite a huge increase in steel prices. Between 2006 and 2008, employment productivity rose 23 per cent, with an industrial average of 13 per cent. “The domestic mechanical engineering sector will be able to return to that trend in 2010 again, thus defending its lead in growth over European competitors“, the sector report by Bank Austria Volkswirtschaft reads.


For further inquiries: Bank Austria Press Office Austria
Tiemon Kiesenhofer, Tel. +43 (0) 50505 - 52819
E-Mail: tiemon.kiesenhofer@unicreditgroup.at

 

 back to the summary