Consequences of the COVID-19 Crisis for Machine Tool
Consequences of the COVID-19 Crisis for Machine Tool
The enormous impact of COVID-19 is felt in the machine tool industry as well as in most other industries. The general economic downturn due to the global pandemic led to a massive drop in demand in the first two quarters of 2020. Factory shutdowns, interrupted supply chains, a lack of sourcing parts, logistics challenges, and other problems aggravated the situation.
Among the internal consequences, two-thirds of the companies surveyed reported general cost cutting due to the current situation. Depending on the vertical integration in manufacturing, this resulted in longer periods of short-time work or even layoffs.
More than 50 percent of the companies are about to rethink their strategy regarding the new circumstances of their market environment. For one-third of the companies, this results in organizational changes and restructuring activities. While SMEs tend to respond with more radical changes to their operative business, most large companies adjust their existing structure and organization to better align with the new situation.
Long-term consequences for the machine tool industry are difficult to predict, but the changing supply chain requirements and increasing demand for digital services are likely to become permanent. Since services are still necessary to keep the installed machines productive, OEMs and suppliers expand their service portfolio focused on digitally enhanced service innovations like remote services. The new circumstances and the social distancing lead to a growing demand for advanced digital services.
On the customer side, permanent changes are more clearly visible. The aerospace industry is suffering from worldwide travel restrictions. Airbus and Boeing announced plans to reduce their production for the next few years. The same applies to the shipbuilding industry, where the demand for cruise ships has dropped to zero. These production cutbacks will also have a negative impact on the machine tool demand in the next couple of years.
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