Mechanical engineering companies in the south-west region are once again facing a downturn, with incoming orders plummeting by 12% in October compared to the same month last year. This marks the 18th consecutive month of declines, according to the Baden-Württemberg mechanical engineering association, VDMA. Despite a slight uptick in September due to "special effects," all other months this year have seen double-digit declines.
Dietrich Birk, Managing Director of the state association, warns that order backlogs are dwindling, which will negatively impact companies' sales. Between August and October, orders fell by 8%, resulting in a 14% decline in the first ten months of the year.
In light of these challenges, it's crucial to recognize the broader trends affecting the mechanical engineering sector globally:
- Positive growth tendencies, driven by investments in transport infrastructure, climate adjustment, and energy infrastructure, are notable in European mechanical engineering.
- Countries like Italy, France, Spain, and Poland, each with their individual strengths and challenges, play significant roles in European mechanical engineering.
- China's rapid growth in mechanical engineering, driven by government support, internal demand, and technological advancements, makes it a formidable competitor.
- Energy prices have substantial influence on the mechanical engineering sector, and the U.S. Energy Information Administration (EIA) forecasts that Brent crude oil prices will fall to $72/b in December 2025.
- Construction and engineering spending in the U.S. is projected to grow by 2% in 2025, driven by infrastructure investments and legislation such as the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA).
Although specific data for the southwest region is not provided, it is likely that regional mechanical engineering companies would share the common challenges faced by the sector, such as supply chain disruptions, escalating material costs, and the need to adapt to technological advancements and sustainability demands. However, the positive growth in construction and infrastructure spending could provide some stability and opportunities for mechanical engineering firms in the region.
