THE surplus of raw materials, particularly metal, together with a corresponding massive fall in prices, have left a mark on the balance sheets of German mining machinery manufacturers. The industry expected a 3% drop in sales to 3.62 billion Euros with a continuing decline in profits expected for 2016.
The downward trend has continued on the domestic market for German mining machinery manufacturers. Political discussions about the future of lignite fuelled power stations “is putting pressure on investment levels,” said Dr Michael Schulte Strathaus, who is chairman of the Mining Association in the German Engineering Federation (VDMA). He announced a decline in sales of 8% to 210 million Euro for the industry in 2015.
Manufacturers expected a 3% fall in international sales to 3.41 billion Euros in 2015. The Mediterranean and Middle East account for the largest export markets (17%) while Saudi Arabia has become the largest customer with an 8% share. Together with Iran, governments there want to reduce their dependency on oil, according to Michael Schulte Strathaus. Mining is being developed as an additional mainstay.
Latin America is the second biggest sales region with an 11% market share, followed by China with 8%, the USA with 7% and Russia with approximately 5%.
The industry expects a further low single-figure percentage decline in exports for 2016 which the president blames on weak investment levels due to ongoing poor results from raw material producers. They are fighting falling prices by shutting down production plants, said Michael Schulte Strathaus.
Given the difficult situation, all in all mining machinery manufacturers had done really well, he said. Significant adjustments to staffing levels have been avoided, with the number of employees falling by only about 600 to 13,700 in 2015.
Despite the gloom, he said mining machinery manufacturers held a positive outlook on the future. “An increasing number of companies are registering a rise in customer enquiries. Some sectors are also developing new areas of business, for example in hard-rock mining. They assume that demand for the raw materials extracted in hard-rock mining will increase substantially as a result of a global expansion in alternative methods of energy production. “Manufacturers see the need for raw material producers to reduce costs as a further cause for optimism, since this can only be achieved by increasing efficiency. And that is where our machinery and plant come into play.”
A global trend toward increasing safety also benefits German manufacturers. He also believes that the bauma 2016 industry trade fair in Munich from April 11-17 may “provide a certain boost”.