The road to recovery in the machinery industry

April 28, 2020

Covered by the new coronavirus epidemic, the global machinery industry market has a long and difficult road to recovery.

The income of global machinery production in 2019 is already in negative growth, and this year’s epidemic will increase losses. Omdia forecast shows that machinery production revenue contracted to -1.6% last year, while in 2020 it will drop sharply to -14.4%. The scale of the contraction will be the most severe in more than a decade, after the 2008 Great Depression. During the last economic depression, the decline in industrial income only reached -16.4%. Omdia expects that the automation equipment market will also be difficult to survive in the global epidemic. Although previous revenues were expected to increase by 1.2% this year, a new analysis shows that revenues will drop significantly to -11.2%.

The chart below shows the annual revenue growth forecast for the global industrial automation equipment (IAE) and machinery production (MP) market by 2023.

COVID-19 (New Crown Virus) and its domino effect on machinery industry activities

With governments around the world ordering mandatory isolation and closing unnecessary businesses and trade, industrial activity around the world has stalled. The machinery industry is no exception.
In industries with low diversification and tight integration, such as automobiles, airplanes, semiconductors, and electronic products, machinery production will be affected, and these industries are expected to have reduced supply. In these industries, the shutdown of a single factory may cause other production enterprises in the supply chain to massively reduce production due to component supply problems, or even stop production in severe cases.

Japan’s machinery market is expected to suffer a major blow due to its heavy dependence on exports. South Korea’s Samsung (Samsung) is the world’s largest supplier of memory chips and display panels. The closure of its factory will affect the supply chain of the electronics industry, which will lead to a series of shutdowns in the network of suppliers, distributors and resellers due to blocked parts procurement. This situation will be replicated in the global industrial landscape throughout Asia-Pacific, Europe and the rest of the Americas.
Similarly, in the industrial automation market, the processing industry from automobiles, shipbuilding, electricity to oil and gas, chemical, oil refining and petrochemical will not only be hit by COVID-19, but also by the lack of investor confidence.
China’s suspension of production has impacted other countries in the Asia-Pacific region, where most countries rely on China as their main export market for goods and services. Although the current epidemic in China seems to have been brought under control, most production and trade activities are still restricted. As overseas demand contracted, China suspended overseas investment.
Meanwhile, Omdia expects the Japanese industrial automation equipment market to resume this year in the fourth quarter of 2019. However, due to the prevalence of COVID-19 (New Crown Virus), the recovery of the Japanese industrial automation equipment market will be postponed until 2021. Europe will also be hit hard, and Germany and Italy may fall into recession and may drag the eurozone.

The long and difficult road to recovery

Although it is the world ’s largest economy and is considered to have sufficient defense resources, unprecedented shutdowns and shutdowns will not save the United States or China.
The first outbreak in China may have successfully contained the coronavirus, but even if the factory is resumed full production, there will be no market to supply because the rest of the world is still unable to trade. The residual effects of coronavirus may also lead to a weakening of industrial activity in China, as workers need to be cautious and slow down the pace of production and assembly.
In the United States, the prospects are particularly grim. Unrest in the political situation, quarantine orders, travel restrictions, and the closure of commercial establishments such as restaurants, entertainment venues, and shopping centers have triggered massive layoffs. The loss of income for a large number of people will translate into a severe reduction in consumer spending, and the demand for manufactured goods will almost disappear.

Regarding the world economy and when global industrial production will rebound, the answer to this question will depend on when COVID-19 (new coronavirus) is effectively contained. The possible situations range from the most optimistic to the most severe. The rebound trend that usually occurs after a sharp economic downturn will not be possible this time because of many uncertainties. In addition to having to fight the recession caused by the epidemic, countries are also the first to be hit by low oil prices and face the arduous task of damage control after the outbreak.
Even in the most optimistic situation (the conclusion that the epidemic will be contained within the next three months or find some cure is rarely recognized in many epidemic assessments), the impact of the epidemic on the global economy will be brutal and lasting A recognized fact.

Delin company’s return to work plan

Faced with this sudden outbreak, the whole world participated in the prevention and control of the epidemic. The Delin company implemented measures such as body temperature detection, disinfection and ventilation in the workplace, wearing protective masks, and strengthening prevention and control propaganda for the epidemic. Local ventilation, disinfection and sanitation management.

Although the epidemic has brought a large short-term impact on the operation of the global economy, the impact of the epidemic is exogenous, temporary and covering. During the above protection work, Delin machine will continue to produce assembled foundry machine and machining equipment, produce as much as possible and on time, try not to affect the original delivery time of the machine, and help the customer’s planned production go smoothly!

Hope everything comes back soon!


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