IMS Research claims that 2011 will be a record year for worldwide machinery production, with aggregate 10.2 percentage growth. A new report, Machine Production Yearbook – 2011, also predicts that this trend will continue through the forecast period to 2014.
The machine sector was among the hardest hit by the economic downturn and, because of the long-lead nature of the business, it has also been one of the last to recover. However, according to the report from IMS Research, worldwide production of machinery is set to eclipse its previous record, set in 2008.
Andrew Robertson, a Market Analyst with IMS Research, comments: "The latest indicators are that growth is slowing slightly from the highs seen last year – hardly surprising when you consider the magnitude of the bounce-back seen in 2010 – but there still appears to be solid growth on last year. This should, of course, be encouraging news; however, when output is considered on a regional basis, the contrast is striking."
Output from Asia-Pacific declined in 2009, but not to the same extent as in Europe and the Americas; and while Japan's output plunged in 2009, China and India continued to see growth. But helped by tremendous growth in Japan in 2010, Asia-Pacific comfortably surpassed its 2008 levels in 2010, and looks set to continue its strong performance.
In the Americas, where machinery output is still dominated by North America, the decline in 2009 was more severe, and the subsequent recovery more gradual. That said, the recovery has been such that 2011 is predicted to be a record year for machinery production.
Meanwhile, the 2009 downturn in Europe was more severe than in the other two regions, and recovery has been more varied. Although Germany's upturn has been fairly strong, the plight of others - such as Spain, Greece and Portugal - has been widely documented. As such, IMS Research anticipates that machinery production in Europe will not surpass the pre-recession level until after 2012*.
The figure below illustrates the varying performance of the three nations that have traditionally dominated the machinery sector. Whereas machinery production in Germany and the US recovers to set record-breaking years relatively quickly after the downturn, the outlook in Japan is in stark contrast.
The Japanese industry plummeted in 2009 and, at present, the outlook is still uncertain. As such, even with growth in 2010 of almost 40 per cent, production is still not expected to recover to pre-recession levels before 2015.
Robertson states: "Although no industry is immune from the effects of the current economic uncertainty, machinery output, for the time being at least, appears to be faring better than the markets and economy in general. Whether it will continue to do so is yet to be seen."
* Writing on 1 November 2011, Robertson adds: "The latest edition of the report includes forecasts out to 2015 - and for the UK, output is predicted to be still just behind pre-recession levels."