FRANKFURT: German engineering exports to the United States, their top destination, are likely to slow sharply this year due to drastically lower fracking investments, a weaker global economy and a more stable exchange rate, an industry association said.
The VDMA, which represents large engineering companies such as Siemens as well as thousands of medium-sized industrial goods makers, said on Friday it expected roughly flat exports this year after an 11 percent jump in 2015.
“Slower means roughly stable in euro terms,” Executive Director Thilo Brodtmann told Reuters on the sidelines of a news conference on the importance of the U.S. market.
The United States became the biggest market for German engineering exports last year, with sales rising to 16.8 billion euros ($19 bln), while exports to China fell 6 percent to 10.3 billion euros.
The main factor driving new exports this year is likely to be demand from U.S. carmakers and their suppliers, the VDMA said.
Sixty percent of German engineering firms plan on making investments in the United States in the next three years, according to 200 responses the VDMA collected in a survey in January and February.
About half of these investments will be in building and expanding production and assembly facilities.
The leading German firms in the United States by revenue are Siemens, Robert Bosch, Thyssenkrupp, ZF Friedrichshafen and Linde, the VDMA said.
However, the VDMA said it was sceptical about a widely held belief that the American economy was being reindustrialised, pointing out that manufacturing’s share of U.S. gross domestic product had levelled out at around 12 percent.
“We don’t consider it a trend but a spotty development, which at best prevails in some regions but is not universal,” VDMA President Reinhold Festge told the news conference.
German engineering companies invested 6.8 billion euros in the United States in 2013, the last year for which statistics are available, the VDMA said.
Since then, European companies including Austrian steelmaker Voestalpine and German chemicals group BASF have invested billions of dollars in the United States, attracted by cheap energy prices following the shale gas boom.
Most of the companies surveyed by the VDMA expected competition for U.S. business with Chinese rivals and with other foreign manufacturers with local U.S. production to remain tough.
China is the top exporter of engineering goods to the United States, followed by Japan, Mexico and then Germany.
“We were never strong in the mass market. We’ve always been strong in niches,” Festge said. “There’s very substantial and bitter competition. Anyone familiar with the U.S. market knows you don’t get anything for nothing.
