EMO Hannover: Digitalization a catalyst for growth in machine tools industry | Automation.com

EMO Hannover: Digitalization a catalyst for growth in machine tools industry

October 10, 2016 - The next EMO Hannover runs from September 18 to 23, 2017. As a leading trade fair for metalworking and machine tools, it is both a key window on current technology trends and innovations in production engineering and a major catalyst for investment in machine tools, production solutions and production-related services. EMO Hannover is organized by VDW, the German Machine Tool Builders’ Association, which has selected “Connecting systems for intelligent production” as the show’s 2017 motto, underscoring the decisive role of digitalization. “Industry experts anticipate that digitalization will yield a quantum leap in productivity and competitiveness across all industries,” commented VDW CEO Dr. Wilfried Schäfer.

Global machine tool consumption to pick up again in 2017

Owing to various crises around the world, global economic growth is rather muted at the moment. This is affecting industrial production generally and hence also capital spending on machine tools by key user industries worldwide. According to VDW statistics, the global market for machine tools was worth 68.1 billion euros in 2015. For 2016, VDW’s forecasting partner Oxford Economics is predicting growth of 2 percent, which is fairly modest compared with long-term averages. The best-performing segment of the market is Asia, with India and Thailand in the lead. Europe, particularly Eastern Europe, is also forecast to achieve positive growth in machine tool consumption. Of course, this has to be seen in the context of the Brexit, which is putting a dampener on Europe’s performance overall. The Americas will be at the back of the pack in 2016, thanks in large measure to the difficult economic situation in Brazil.

Economic climate improving in EMO-year 2017

For 2017, the economists are forecasting an improvement in the general economic situation – and with it a 3.6 percent increase in machine tool consumption worldwide. Europe is likely to be out in front with growth of 5 percent. Once again, this will be driven primarily by the countries of Eastern Europe, although the UK is also expected to be back on form. Italy, Spain and Turkey – three major European markets for machine tools – are also forecast to perform well, although the current political situation in Turkey does cast a bit of a shadow over the latter part of this outlook. In Asia and the Americas, meanwhile, machine tool consumption is likely to trend below the global average at 3.2 and 2.2 percent, respectively.  

Given this forecast, EMO Hannover is the ideal platform for US-based machine tool manufacturers seeking to position themselves in the international market. The show will enable these manufacturers to target precisely those buyers and industry professionals who will be spending above the global average. In terms of hard figures, around 77 percent of the show’s 60,000-strong non-German attendee constituency comes from Europe, with another 17 percent hailing from Asia, and 4 percent from the Americas. “So as well as reaching some 80,000 German-based production experts, our US exhibitors will be able to precision target those markets that are forecast to grow faster than their global peers,” VDW’s Wilfried Schäfer explained. “In this sense, EMO Hannover is much more effective than any of the other major machine tool trade shows in Europe, Asia and the Americas,” he added.

Strong demand for advanced production technology in the US auto, aircraft and machinery industries

The US economy has enjoyed steady growth for seven years in a row, largely on the back of private consumption. Investment activity by the country’s industrial sector, on the other hand, is rather sluggish. According to GTAI – Germany Trade & Invest, an important source of international economic data – key US industries such as mining, oil and gas production and agriculture are currently in a consolidation phase. Capacity utilization in extensive areas of the US industrial landscape is less than satisfactory, and declining corporate profits and week international demand are weighing on sentiment.

The outlier here is the auto industry, which is doing very well, with record sales of passenger cars, SUVs and other light vehicles. The strong sales figures are due in no small degree to favorable fuel prices, affordable financing and moderately increasing household incomes. Meanwhile, the push towards smaller vehicles has opened the door for the widespread adoption of new technologies in areas such as turbo charging, fuel direct injection and start-stop systems. In other words, the US auto industry is primed for new capital investment, and EMO Hannover 2017 is the ideal place for buyers to research and execute their investment decisions.

80 percent of all vehicles sold in the USA are also made there. This is fueling demand for advanced production technology among US auto manufacturers. And that demand is strong, because the industry has a lot of catching-up to do. Nearly all US auto makers have signaled large-scale projects to modernize and expand their production capabilities. For example, Oxford Economics is forecasting that the US automobile industry will increase its capital investment by 6.9 percent in 2017. A good chunk of this investment will go into lightweight components and other technologies for reducing fuel consumption. Hence the industry’s strong focus on solutions for processing aluminum and on combinations of lightweight materials and carbon. The same trend can be observed in the aircraft manufacturing industry, which next year plans to increase investment by 7.1 percent. The high-quality, advanced production technologies needed for these applications will be on show at EMO Hannover 2017.

Strong demand for machine tools is also expected to come from various sectors of the US mechanical engineering industry, particularly from manufacturers of machinery for the food, packaging, textiles and plastics industries.

EMO Hannover to star as leading showcase for digitally integrated production solutions

In the German mechanical engineering industry – particularly in machine tool manufacturing – machine fleet integration and automation are increasingly the focus of efforts to deliver greater flexibility and productivity to machinery customers.

“This is also a key focus of EMO Hannover 2017,” explained VDW CEO Wilfried Schäfer. “The discussion around digitalization and integration has made its way from the drawing board and onto the factory floor, in the form of systematic production solutions,” he added. “At EMO Hannover we therefore expect to see a wide range of fully realized applications for production. Interestingly, this is precisely the focus of our government’s ‘Hightech Strategy 2020’ program.”

The developed world is giving priority to re-industrialization and employment as it moves on from the global financial crisis. In the USA, smart technologies are on the rise as part of wholly pragmatic initiatives to deliver added value to the customer. Data-driven services are seen as the way forward. New products and services and innovative business models that deliver added customer value rank clearly and unequivocally ahead of purely technology-centric innovation. This difference in approach between the USA and Germany is mirrored in the two countries’ differences in emphasis when it comes to the Internet of Things. In the USA, the main emphasis is on ensuring compatibility between existing standards across a highly diverse range of industry and service sectors. The aim is to facilitate streamlined cooperation and interoperability between players in multiple sectors. Germany, on the other hand, is concentrating its industrial energies on a completely different aspect of the IoT challenge – the design and development of integrated, seamless solutions within individual sectors. As well as technology, this approach encompasses the issues of data security and the future of work (‘Work 4.0’). These factors were analyzed in a 2016 study titled “Industry 4.0” by the University of Paderborn’s Heinz Nixdorf Institute, RWTH Aachen University’s Laboratory for Machine Tools and Production Engineering (WZL) and acatech (German Academy of Science and Engineering (acatech). The study gives an overview of the current status of Industry 4.0 in all the key countries that have taken up the Industry 4.0 challenge.

It shows that the rise of data-driven services is driving innovation primarily in IT and software – areas in which the US has particularly well-developed capabilities. “But purely data-driven business is only one side of the coin,” commented VDW CEO Wilfried Schäfer. “The other side is expertise in building plant and machinery that can be used to cost-effectively manufacture high-quality products,” he added.

And that is the side of the coin that German is focused on. The country is committed to maintaining its world leadership in industrial production. “Here in Germany, Industry 4.0 is about all the various aspects of manufacturing and production across entire production and supply chains and, in certain cases, across product life cycles,” Schäfer said. “This integrated approach is vital to greater process efficiency, increased quality and productivity and lower production costs.” The idea is for product designers, engineers, production planners, logistics specialists and product users to share a common database and thereby make product requirements and actual product characteristics totally transparent to all parties at all times. Germany’s machine tool manufacturers are playing a key part in this paradigm. They are combining their proven expertise in the production of reliable precision machinery and efficient manufacturing processes with new web-based technologies. What’s more, they have been working for several years with multiple international partners in order to get the best out of both of these two key facets of Industry 4.0.

And the results of this will be on show at EMO Hannover 2017. EMO Hannover is a showcase of state-of-the-art production technology, staged at the heart of a country that is known and respected worldwide for the superior quality of its machines. At EMO Hannover, US-based attendees seeking to modernize their production systems will find a concentration of production engineering know-how and expertise that is without parallel worldwide.

USA and German close allies in the machine tool business

The USA imports over 60 percent of its approximately 6.6 billion euro annual machine tool consumption. At 16 percent, Germany is the USA’s second-most important foreign supplier after Japan. Meanwhile, the USA is Germany's second-most important export market for machine tools, accounting, as it does, for around 10 percent of German machinery exports. In 2015, Germany exported around 953 million euros worth of machines, parts and accessories to the USA, a 7 percent increase following two straight years of declines. This trend has continued, with exports to the USA increasing 15 percent over the first half of 2016. These exports related mainly to parts and accessories, machining centers, bending machines, lasers and grinding machines.

“The German machine tool industry has a very strong following among large US-based auto makers, industrial subcontractors, aircraft manufacturers and mechanical engineering companies,” explained VDW CEO Schäfer. “But we would also encourage the USA’s many small and medium-sized users of machine tools to attend EMO Hannover and find out what the international machine tools and metalworking industry has to offer.”

“The same is true of US-based manufacturers of machine tools and production equipment. They, too, need to focus more on the international markets,” Schäfer added. “Obviously they are internationally competitive, as evidenced by their global market position.” The USA produces about 4.1 billion euros worth of machine tools annually, which equates to about 6 percent of global output and puts the country among the top 10 machine tool manufacturers worldwide. US machine tool manufacturers export approximately 40 percent of their total production. US exports have, however, experienced a double-digit decline in recent times.

This includes exports to Germany in the first half of 2016.

Germany is the sixth most important export market for US machine tool manufacturers. Conversely, the USA is the sixth most important supplier of machine tools for German industrial users. In 2015, the country exported some 146 million euros worth of machinery – mainly parts and accessories – to Germany. In view of these facts, US machine tool manufacturers have much to gain from exhibiting at EMO Hannover 2017. The show is an excellent opportunity for them to position themselves in the global market as quality, expert suppliers.

US industrial spending expected to pick up in 2017; German industry has high hopes for TTIP

US industrial spending on capital equipment is currently rather subdued. “However, we anticipate that the re-industrialization process will gain further momentum after the presidential elections in November,” commented Schäfer. “German industry – particularly our mechanical engineering industry – has high hopes for the Transatlantic Trade and Investment Partnership between the EU and the US. “We are really counting on this vitally important agreement and we call upon our political leaders to commit to bringing the negotiations to a successful conclusion,” he said. “Looking at the US-German bilateral trade in machine tools, there is still plenty of upside potential – potential that could be successfully leveraged via the TTIP,” he added. A decision in favor of the TTIP could be a boon both for EMO Hannover 2017 and US-EU trade in machine tools.

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