VDMA: Boom in Agricultural Machinery Industry

The agricultural machinery and tractor manufacturers have come to this year's Agritechnica in an exceptionally strong economic upswing phase.

"It really is extraordinary how dynamically the agricultural machinery industry has grown this year", said VDMA Managing Director Dr. Bernd Scherer at the press conference opening the world's largest exhibition in the sector in Hanover on Monday. "That is why we have revised our already ambitious growth forecast of September upwards by a further eight percentage points to now 28 percent", added Scherer. "Sales of 7 billion Euros for machinery made in Germany – that is sensational and really inspires us."

Further slight increases expected for 2012

The VDMA statistics experts have also given their thumbs-up for 2012. Further slight increases are to be expected, so that from today's standpoint a turnover level of Euro 7.4 billion is calculated. "That would bring us back to the all-time record level of sales for agricultural machinery and equipment achieved in the year 2008", stressed Scherer. The present workloads in the factories definitely confirm this forecast. At a capacity utilization rate of more than 85 percent, the agricultural machinery industry is currently de facto "working at full capacity".

Excellent business climate in European industry

The current CEMA Business Barometer, a monthly survey of top decision makers in the European agricultural machinery industry, also supplies peak values. It shows that the absolute majority of all persons interviewed rates the current business situation as very good or good. "The fact that these assessments are based on well-founded business ratios and are by no means due to short-term euphoria is shown by the positive expectation attitude for the next six months", said Scherer. After all, around 41 percent of managers stated that they saw further growth ahead. "Above all the tractor and harvesting machinery manufacturers are very satisfied and remain optimistic about market developments. In view of the further increases in orders received, sales expectations thus remain altogether expansive."

German agricultural machinery market stronger than ever before

Germany is clearly asserting its position as boom engine in Western Europe. VDMA predicts a market volume of Euro 4.9 billion for 2011, equivalent to a 25 percent increase. "This will outstrip even the record year 2008 by nearly 9 percent."The tractor market that grew significantly in the first half of 2011 can serve as a mirror for this development. With an estimated 35,000 tractors, the sales volume up to the end of the year will be higher than it has ever been since the mid-1980s. "And we must remember that in those days there were more than twice as many farms as there are now and thus twice as many potential customers", reminded the VDMA Managing Director.

After this year's record peak, no further increase is realistically expected for 2012. However, a still very good market volume of Euro 4.5 billion is still expected.

Export markets nearly all set for growth

The export markets too are displaying incredible dynamism. "Altogether this year we have grown in 13 of our 15 top markets, a result that we very seldom see."France traditionally tops the league as the strongest foreign market and sales there for German suppliers are expected to reach Euro 1.2 billion in 2011. However, smaller markets too like the Czech Republic, Denmark or the Baltic States are displaying high growth levels. Altogether the EU market for agricultural machinery and equipment is expected to rise to an estimated Euro 24 billion this year, corresponding to a plus of 16 percent.

For the first time since 2008 Russia once again ranks second in the VDMA export league, after slipping to sixth place two years ago. By the end of the year, agricultural machinery and tractors worth almost 600 million Euros will have found their way from Germany to the Russian Federation. "The reason why this so important market of the future has become strong again is the still extremely high demand for mechanization", emphasized Scherer. He said it was now possible to respond to this need better again thanks to the external financing options that were now available. "On the other hand the Damocles sword of protectionism still hangs over Russia's agri-business and agricultural machinery sector. That not only harms the competition for innovations, but is also a perceptible obstacle to growth for the farmers in the field."

Farmers in ideal mood to invest

However, the mood among German farmers could hardly be better. Good producer prices for farmyard and field work are currently encouraging investment intentions of farmers and contractors.

Some 31 percent of the farmers plan to invest in machinery and equipment in the next six months. The share of farms intending to purchase agricultural machinery and equipment thus remains roughly at last year's level, showing a slight tendency to increase.

Recruiting junior staff as a measure of innovation capability

The growing intensity of technology in the agricultural machinery industry and foreseeable demographic developments are leading the sector to focus increasingly on recruiting newcomers.

"After all, optimally qualified mechanical engineers, electro technicians and computer specialists are the prerequisite for trail-blazing agricultural machinery developments", points out Scherer. In order to secure the innovation capability of the industry sustainably, companies have to rely more than ever before on qualified young engineers.