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International News From the Field: Europe

Europe loses momentum amid the war in Ukraine and the current Israel-Hamas war. Inflation drops, delivery times improve, and inventories are growing, but is that enough to sustain economic recovery? For more industry intel and other tidbits, read on.
Oct 25, 2023

October began with positive data in the eurozone, showing an annual inflation rate of 4.3% in September 2023, down from 5.2% in August (9.9% in 2022). Inflation in the European Union itself came in at 4.9% in September 2023, down from 5.9% in August (10.9% in 2022). The lowest annual rates were registered in the Netherlands (down 0.3%), Denmark (0.6%), and Belgium (0.7%), while the highest were recorded in Hungary (12.2%), Romania (9.2%), and Slovakia (9%).

Despite the good news on the inflation front, bigger headwinds loom in Europe. Major concerns and uncertainty from the Israel-Hamas war are impacting European markets already weathering the ongoing war between Russia and Ukraine.

The eurozone manufacturing PMI downturn continued through the third quarter. Recent data confirmed PMI at 43.4 in September 2023, remaining little changed from the previous month's 43.5. This figure signaled the 15th successive month of contraction in the bloc's industry sector as new order inflows dropped at one of the steepest paces seen in the survey's 26-year history.

According to Swissmem, the Swiss technology industry (mechanical and electrical engineering and related technology sectors) experienced a downturn in the first six months of 2023, with new orders falling by 9.6% compared to last year. New orders declined significantly more in the second quarter than in the first (down 14.3% compared to down 4.8%). First-half exports also fell by 1.1%, while sales languished at the previous year’s levels (0.7%). The globally low PMI and gloomy company expectations portend a difficult second half of the year.

French association EVOLIS informed manufacturers that they expect slight growth in 2023 despite weak order flow. For the manufacturers of equipment for handling, construction, fluid treatment, production machines, and industrial robots, higher raw material prices and supply issues are gradually fading. As a result, delivery times and inventory are improving. However, new orders are now expected to slow down, impacted by rising inflation, more restrictive access to credit, and a less favorable cash flow situation. This slowdown is further evidenced by the decline in order books. However, these are still high, which augurs well for a trouble-free 2023 despite a more challenging second half of the year.

A few recently announced projects and investment news items are listed below:

  • Kistler, a measurement equipment manufacturer, bought a large property to build a smart factory, which will represent their innovation and production center of the future. It will combine the most modern processes with a high level of automation. Furthermore, the company aims to create the world's largest production facility for piezoelectric sensors.

  • Profiroll is building a new production center with 40 grinding machines and 100 workstations. This state-of-the-art facility will use 2,050 MWh less electricity than its predecessor, and it will save 966 tons of carbon dioxide emissions with strategic energy management, LED light settings, and a large photovoltaic park to power the factory.

  • Hexagon Purus, a manufacturer of zero-emission mobility and hydrogen infrastructure solutions, has opened its new hydrogen cylinder manufacturing hub in Kassel, Germany. The 83,000-square-foot state-of-the-art facility annually produces more than 40,000 Type IV high-pressure hydrogen cylinders for fuel cell electric mobility and hydrogen infrastructure applications.

  • SGL Carbon and automotive braking systems manufacturer Brembo S.p.A. have agreed to expand production capacities for a joint venture, Brembo SGL Carbon Ceramic Brakes (BSCCB). BSCCB will invest around $158.85 million until 2027 to expand production capacities at the Meitingen, Germany, and Stezzano, Italy sites by more than 70%. The plans for capacity enlargement include constructing two new production facilities at the SGL Carbon Meitingen site, with a total area of around 8,500 square meters, and the installation of new production machinery. The groundbreaking in Meitingen will take place in the fall of 2023. The Stezzano site’s production areas will be extended by around 4,000 square meters, and investments will be made in new production machinery.

  • Danish company Orsted is partnering with Siemens to build Europe’s largest commercial production facility for carbon-neutral marine fuels in Ornskoldsvik, Sweden. This plant, FlagshipONE, will be able to produce 50 million kilos of e-methanol per year by 2025 from renewable energy and biogenic carbon dioxide, reducing the environmental impact of the shipping industry by avoiding 100,000 tons of carbon dioxide emissions. 

For more information, please contact Conchi Aranguren at caranguren@AMTonline.org.

Conchi Aranguren
AMT's Representative for Europe
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