We received from Ucimu-Sistemi per produrre the press release about orders for machine tools in the third quarter of this years and we publish it.
“In the third quarter of 2009, the index of orders for machine tools, as provided by Ucimu-Sistemi per produrre’s Studies department, suffered a drop of 51.6 percent compared with the corresponding period of 2008. The absolute value of the index is 37.4 (2005 base = 100).
The overall result was negatively affected by an extremely low number of orders from manufacturers within the domestic market, as well as weak demand from foreign markets, confirming the extent to which the crisis continues to affect overall demand for capital goods.
With regard to the domestic market, orders taken from Italian manufacturers fell 54 percent compared with the third quarter of 2008. The absolute index therefore stands at 19.9. These latest figures represent a continuation of the downward trend that has now seen orders fall for six consecutive quarters.
Meanwhile, the number of orders from foreign markets is equally worrying: between July and September 2009, the index of orders from foreign markets plunged 49.9 percent compared with the corresponding period of 2008. The absolute index therefore stands at 55.1 (2005 base = 100).
In the first nine months of the year, the number of orders placed fell by more than 50 percent; due to a drop of 55.3 percent compared with the corresponding period of 2008, the absolute index has a value of 55.9.
“The data processed by the Studies Department – said Giancarlo Losma, president of Ucimu-Sistemi per produrre – still paint a rather complex picture for Italian industry in the sector, which must reckon with weak consumption in both the domestic and foreign markets. The only thing that gives us hope for the future is the comparison between the third quarter and the previous periods. By analysing the variation in the index for the period in question, we can see that order numbers actually fell to a lesser extent: after the index fell 63.1 percent in the second quarter, now, thanks to the 51.6 percent drop, we are returning to the levels of the figures recorded in the January-March period, at the beginning of the crisis, when the index fell 51 percent”.
The impression that the lowest point of the economic downturn is behind us is also confirmed by the strong result posted by Emo Milano 2009, the worldwide sector exhibition that was held in Milan at the beginning of October. The six days of the exhibition attracted 124,660 visitors, 41 percent of whom came from abroad, representing 98 Countries from five continents. Non-European operators were well represented, with a particularly large number of visitors from India, Russia, Japan, the United States, Brazil, South Korea and Taiwan.
“Despite these timid signs of a turnaround, concerns remain high. The severe and prolonged decline in orders from manufacturers – said Mr Losma – gives rise to a real risk that the sector will be reshaped, with small and medium-sized companies surely being more exposed than their bigger counterparts in an unfavourable economic climate. Our concern is that companies which are at risk of going out of business due to low levels of orders and liquidity will no longer be able to stay in the market. This is a terrible shame for the business and the people that make up the company, for the sector and also for the country’s economy, which risks losing expertise in a segment that is strategic to the manufacturing industry as a whole”.
While aware of the efforts already made by government bodies in terms of both facilitating credit, with the implementation of a moratorium on the debts of SMBs to lenders, and boosting demand, via the introduction of the ‘Tremonti-Ter’ tax breaks, Ucimu-Sistemi per produrre nevertheless believes it is essential that further measures be implemented so as to enable the sector to overcome the crisis and benefit from the recovery, holding onto its position as a world leader.
“To this end – said the association’s president – there must be incentives to replace dated engineering products via an industrial policy measure enabling obsolete machinery to be scrapped and 50 percent of the amount invested in the purchase of new replacement machinery to be tax deductible. This measure would not only provide an incentive for a boost in consumption, but is also the best way of guaranteeing the competitiveness of Italian products”.
A recent survey showed that in Italy, as in the rest of Europe, around 25 percent of production machinery in factories is more than 20 years old. Production equipment therefore needs to be replaced at both the national and European levels.
This measure would have a positive impact on other aspects of the socio-economic system. As well as guaranteeing that Italian- and European-made products retain high levels of competitiveness, it would enable greater efficiency and therefore cut costs for all manufacturing companies. Furthermore, the replacement of old production systems with new ones would ensure that manufacturing would have less of an impact on the environment and guarantee a higher level of safety for machinery operators.
Finally, the replacement of obsolete machinery would free up a vast quantity of cast iron and steel, which would also have a positive impact on the cost of raw materials.
Furthermore, in order to enable companies to overcome the current difficulties and be in the best position to benefit from the forthcoming recovery, it is essential that government institutions intervene effectively at European level to facilitate credit. A temporary relaxation is needed of the risk-weighting criteria for credit extended to SMBs, which determine the reserves that banks must have in order to comply with the Basel II Accord.
There are particularly strong calls for an amendment to the accord that takes into account both the difficult economic situation and the need to also assess a business from a qualitative point of view, that is, taking into account the sector it belongs to, in order to combine the assessment of the balance sheet data with an assessment of its business capacity.”.
