Resilience under pressure: EU engineering industry continues to grow at a moderate pace
13 June 2017
The last year has been one of political turbulence and economic uncertainty, but the European engineering industry has emerged resilient and continues to grow. Across the sectors represented by Orgalime, the latest economic data and forecasts are encouraging – as the impact of developments such as digitisation and data-driven business models begins to reverberate throughout the industry.
Official data for 2015 puts turnover in the European engineering industry at around €1.977 billion, and headcount at almost 11 million. And estimates for 2016 tell a positive tale: activity in the sectors represented by Orgalime was up 1% year-on-year, primarily fuelled by a slight economic recovery in the EU and worldwide. “We have seen an upturn in output across European industry and in the construction sector,” explains Tomas Hedenborg, President of Orgalime, “and we have received a boost from the increase in new vehicle registrations in the automotive industry – a major client for engineering firms.” Moreover, key indices suggest that business confidence, too, is on the rise. However, the engineering industry has also faced its fair share of challenges over the last 12 months: from a continuing slump in the BRICS markets, to the substantial depreciation of the Pound Sterling in 2016, and the end of the appreciation of the US dollar.
Looking forward to the outlook for 2017, cautious optimism is warranted. GDP growth should again be rather moderate in most industrialised countries, with the IMF predicting a slightly higher growth rate than in 2016 for emerging markets. European industry is set to see a jump in investment following a period of underinvestment, and the rise in output in the engineering industry is forecast to reach 1.3%. “If this upswing is realised, 2017 will be the fourth consecutive year of positive growth in our sector,” comments Adrian Harris, Director General of Orgalime. Nevertheless, a number of risk factors remain on the horizon: the impact of Brexit negotiations and populist movements may dent investor confidence, geopolitical tensions remain in Ukraine and the Middle East, and the potential for a protectionist US trade policy under Donald Trump would be bad news for export-oriented engineering firms.
Yet for now there are many reasons to be cheerful – particularly when it comes to employment statistics, with 2017 set to mark the fourth consecutive year of positive growth in engineering industry jobs in Europe. While a slight dip is expected – from 0.3% growth in 2016 to a predicted 0.2% in 2017 – the onward upward trend is a reminder of the central importance of engineering firms in providing jobs to European citizens. “The figures are a testament to the resilience of our industry in uncertain times,” concludes Tomas Hedenborg. “Going forward, digitisation will offer even more opportunities to create skilled employment – provided the right framework is in place across the EU. And for this to happen we need to see policymakers clearly and visibly adopting a forward-looking and supportive approach to manufacturing.”
Download the press release in full to view the detailed report including sector information.