Staff Reporter

The Spanish machine tool sector has recorded a very sharp fall in demand in the last six months but the sector is launching its new Strategic Plan 2009-12 in order to tackle the complicated future in sight with confidence, reporter from 2456.com learnt from AFM (The Spanish Association of Machine Tool Manufacturers)

According to the figures released by the AFM, the sector ended 2008 with 0.9% growth and a turnover of 1.06 billion euros (final figures), mainly thanks to a strong increase in exports which rose by 18.4% to account for 736 million euros, which have offset the increasing weakness in demand.

Innovation and internationalization -- Spanish machine tool makers' keys to recovery

Koldo Arandia, the Chairman of the AFM, made the following assessment: "The good start to the year and the big order books we had allowed us to maintain the sector's production figures in 2008. However, the last six months since September have marked a turning point, in which we experienced a strong deterioration in demand, and a very marked decline in new orders. The panorama has changed radically for everyone and we have to be able to come up with the right measures to get through this in the short, medium and long term."

The general panorama for all producer countries is very similar and the fall in demand is widespread across the markets and in the great majority of customer sectors. AFM expects to see significant contraction in all areas this year and the true dimension of 2009 will be determined by how long the difficulties last in the different economies and the sectors that drive them.

However, Koldo Arandia is confident about the recovery because the sector has experience in tackling and overcoming crisis. He said: "Our track record has shown that we have sufficient ability to adopt the measures to take us forward. In this time of uncertainty, the machine tool sector is constantly doing its homework. In response to those who recommend innovation and internationalization in order to be able to be competitive, the sector is dedicating on average 6% of its turnover to R&D&i activities and exported in 2008 almost 70% of its production. I am fully confident that these two strengths, together with close collaboration with our suppliers, customers and the government are going to be the key to our recovery."

The final data for year end 2008 provided by the AFM shows a solid export performance, backed by overall production for the sector totaling 1.06 billion euros at the end of the year. This figure is a slight increase that only just improves on the record figure posted in 2007.

Spanish machine tool exports rose by a brilliant 18.4% compared to the previous year, to total 736 million euros for the first time and accounting for almost 70% of the sector's total production. Once again the sector's particular balance is positive, with a coverage ratio for exports in relation to imports of 155.5% thereby reinforcing the surplus nature of a genuinely exporting sector. In terms of geographical destinations in 2008, the following stand out in this order: Germany, Italy and France in the European Union (with growth in the three markets), China and India in Asia (with a fall in the former, compared to good growth in the latter) and Brazil and Argentina in South America. Russia is in 10th place in a very positive year for our sector in that market.

As has been happening over the last few years, but perhaps to greater relative effect in 2008, Spain's domestic market has been very weak with a 15% drop in apparent consumption (production plus imports minus exports). "The renewal of production equipment in Spain is unfinished business which is taking its toll on our industrial capacity. Urgent steps need to be taken to facilitate the replacement of equipment that due to its improvable performance has a negative impact on the country's productivity," stressed Koldo Arandia.

Figures of the Spanish machine tool sector (Source: AFM)

Spanish machine tool industry to identify its main challenges

The Spanish machine tool sector has identified its main challenges for the four-year period 2009-12. Challenges which inevitably mean dealing beforehand with two priority areas:

In the medium-term, the sector is setting itself two challenges as part of its new Strategic Plan:

To tackle these challenges, the association has established a series of targets and actions that have an impact on the main areas of our activity like People, R&D&i, and Internationalization and Marketing. K. Arandia said that support from different levels of government is more necessary than ever for a sector which is a reality today and contributes like few others to spreading the image of a technologically advanced country all over the world.

Source: AFM