Europe’s technology industries see growth stalling
23 November 2022
The war in Ukraine is taking a toll on Europe’s technology industries, the Autumn economics report from Orgalim confirms. Rising prices of energy and of pre-materials, on top of historic supply shortages, are dampening demand and constraining production.
"Orgalim’s latest economic forecasts signal the considerable structural and competitive challenges our technology industries are exposed to, just when Europe is counting on them to drive industrial transformation," said Malte Lohan, Orgalim's Director General. "We will continue to support policymakers in their efforts to mitigate these impacts while building an enabling regulatory framework to accelerate a green, digital and resilient transition."
Orgalim’s latest economic forecasts signal the considerable structural and competitive challenges our technology industries are exposed to, just when Europe is counting on them to drive industrial transformation.
A good start to 2022, with high demand and well-filled order books, has given way to a weak second half, as businesses continued to face major supply problems for pre-materials, from industrial metals to electronics to plastics components. At the same time, rising prices – not least for energy – have increased production costs. Europe’s technology industries, typically very export-oriented, are finding it hard to pass these costs on to customers and remain internationally competitive, resulting in squeezed profits.
"We expect demand to suffer in many of our sectors, as falling profits in customer industries lead to less investment in capital goods of the technology industries," said Martin Baminger, chair of the Orgalim Economics & Statistics working group.
On the upside, the orders backlog – especially in the mechanical engineering where the lead times are typically longer – could mitigate the downturn if materials shortages ease. And employment remains stable and is even expected to increase 2.1% in the technology industries in 2022. But the real chance that mounting cost pressures could force production cutbacks or even shutdowns, means the downside risks remain considerable.