According to a new report from the German Engineering Federation (Verbandes Deutsches Maschinenbau Anlagen, or VDMA), the country’s equipment suppliers are facing a drop in demand as of the end of the first quarter of 2018.
VDMA’s latest Business Climate Survey found that 50.8% of companies reported declining orders, and 45.1% reported constant order levels for Q1 2018, compared with the same period last year. The industry is forecasting 9.2% sales growth this year, falling to 3.5% in 2019.
“In the main Asian markets for the German PV-equipment manufacturers, especially in China and Taiwan, significant new production capacities have been built up over the past 12 months,” explains Peter Fath, Managing Director of RCT Solutions GmbH and Chairman of VDMA Photovoltaic Equipment. “Combined with an adaption of the funding guidelines in the largest global photovoltaic market in China, we expect only a modest build-up of new production capacities.”
The survey further revealed that 84% of Germany’s equipment suppliers are happy with the current pricing situation – with 61% generating ‘good’ returns, and 37% reporting ‘satisfactory’ returns. Overall, the sector reported stable employment levels, with 44% planning to hire more employees, and 23% looking to reduce personnel.
The weakening of demand this year was foreshadowed in VDMA’s report for the fourth quarter of 2017, when suppliers saw large revenues, but a fall of 44% in new orders received. In the future, VDMA states that reduced demand for German equipment solutions will be at least partly offset by new production facilities opening up in other regions.
“Opportunities for the German solar engineering industry are emerging in new markets such as India and the MENA region,” says Fath. “The importance of photovoltaic has been recognized in that areas as the most cost-effective renewable energy source. Production facilities are set up in that countries with a clear preference for ‘Made in Germany'.”