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International News From the Field: Europe

With inflation, uncertainty, and other enduring issues continuing to hold up the European Union's economic recovery, all eyes turn to EMO Hannover. Will the trade show help stabilize volatile exports? For more industry intel and other tidbits, read on.
Aug 22, 2023

EMO Hannover is just around the corner. In September, more than 1,750 exhibitors from over 42 countries will gather in Germany. But will this trade show be enough to reinvigorate Europe's still complex economic situation? Uncertainties appear to persist throughout the EU. 

The EU’s economy accelerated in the second quarter of the year, showing a 0.3% GDP growth – higher than the 0.2% expected by analysts.  The inflation in the region remained high in July, standing at 5.5%, same as June’s , raising further concerns for economic recovery. These figures reflect a challenging economic situation for the EU, one that requires measures to address the challenges and seek solutions to boost the region’s economic revival. 

Recently, the Bundesbank – Germany’s central bank – highlighted that Germany has emerged from a technical recession and returned to growth in the second quarter of 2023, noting a slight increase in economic activity. The stabilization of private consumption played a significant role in this growth, thanks to the robust job market and rising wages countering inflation.  

However, industrial production in Germany unexpectedly experienced a significant decline in June. The overall output decreased by 1.5% compared to the previous month, with analysts expecting a milder setback of 0.5%. The automotive industry was particularly burdened, witnessing a 3.5% monthly decline, while construction activity weakened. On a positive note, the pharmaceutical industry contributed to the overall result with a 7.9% increase in manufacturing. 

Although there are positive signs of recovery, the economic landscape remains uncertain, with fluctuations in different sectors affecting Germany's overall growth trajectory. 

In the first half of 2023, Italy's GDP experienced a decline of 0.3%. Inflation has surged by 6.4%, putting pressure on consumer prices.  

Despite these economic difficulties, 2023 is expected to end with the Italian machine tool industry on a positive trend. However, it is important to note that the order intake for the year's first half has stalled, likely due to prevailing uncertainties in the market. 

In the first three months of 2023, the main export markets for Italian machine tool products were the United States, Germany, China, France, Poland, Turkey, Mexico, the Czech Republic, Spain, and India. Notably, the United States and Germany showed significant growth in demand, with increases of 35.4% and 43.8% in export values, respectively.  

Despite the challenges in order intake during the first half of 2023, the forecast indicates a positive outlook for the Italian machine tool industry, with several vital markets displaying promising growth in demand for their products. 

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

  • Automakers Seat, Ford, and Envision are competing for a share of the $1.65 billion allocated for the VEC 2 program, which aims to support the development of electric vehicles (EVs) and connected vehicles. The Spanish government has set aside a total budget of $4 billion for three VEC programs. Seat plans to invest $330 million in battery assembly, while Ford, after passing on the first round, is now applying for the second VEC program. Envision is seeking $330 million for its gigafactory. Volkswagen Navarra is also considering the installation of a battery assembly plant. 

  • Aerospace manufacturer Airbus has inaugurated its new final assembly line for the A320 family in Toulouse, located in the former A380 assembly building. The line began operations in late 2022, delivering the first fuselage sections. The launch of the first fully assembled aircraft in this facility, an A321, is expected later this year. The industrial site will gradually ramp up operations until 2025, directly employing around 700 workers. 

  • Tata Group will build an EV battery plant in the U.K. The factory will supply future battery-electric models for Jaguar Land Rover, including Range Rover, Defender, Discovery, and Jaguar brands, with the potential to supply other car manufacturers. Production is scheduled to commence in 2026, with an eventual capacity of 40 gigawatt-hours, sufficient to supply approximately half a million vehicles per year, depending on battery size. 

  • Machine tool manufacturer, Nicolas Correa, has invested $22 million in constructing a modern machining complex in the Burgos Este industrial park. This complex will focus on working with the structural components that make up their milling machines.  

  • Rheinmetall and its American partners Northrop Grumman and Lockheed Martin will build a factory in Weeze, Germany, to produce F-35A fuselage sections. The factory will begin production in 2025 and is expected to produce at least 400 fuselage sections for Germany and other allied nations. The project foresees an investment of $220 million and will employ over 400 skilled workers on a 650,000-square-foot assembly line. 

  • The University of Sheffield Advanced Manufacturing Research Centre (AMRC) has secured a $100 million investment to establish the Compass (Composites at Speed and Scale) facility in South Yorkshire, U.K. Boeing is the first major research partner for this facility, which aims to support and de-risk new composites and digital technologies for future aerospace component production. The partnership with Boeing, Spirit AeroSystems, and Loop Technology will focus on developing high-rate sustainable structures to meet the demand for lighter commercial aircraft and help the aviation industry achieve net-zero emissions. The goal is to significantly reduce large component process times from approximately 40 hours to around four hours. 

  • Fluid expert Burkert is investing $16 million to expand its plant in Triembach au Val, France, to manufacture industrial sensors. The expansion includes a 16,000-square-foot logistics building and around 43,000 square feet of production areas. 

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

Conchi Aranguren
AMT's Representative for Europe
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