Upbeat forecast for German construction

The German Engineering Federation (VDMA) said it expected this year's revenue growth figure for Germany's construction equipment and building material machinery industries to exceed the 10% increase forecast earlier in the year.

But VDMA reported a mixed picture with some sectors beginning to approach their record revenue levels of 2007/2008 again, such as earth-moving and road construction equipment, while others, such as building construction equipment, are still experiencing difficult trading conditions.

In 2010, the German construction equipment and building material machinery industries recorded sales of €10.6 billion, of which €6.3 billion came from the construction equipment sector and €4.3 billion came from the building materials, glass and ceramic machinery sector.

VDMA said the first six months of this year had seen sales of construction equipment reflect the average of the past seven years, but nevertheless remain 38% below the record level of 2008.

In building material machinery, first half sales were 11% above the seven-year average and 28% below the record level.

Sebastian Popp, VDMA's economic expert in construction equipment and building material machinery, said that the high demand that was seen in the industry at the start of 2010 and the first quarter of 2011 had come to a halt for the time being.

"But it's too early to say whether this downturn in new orders is actually indicating an end to recovery and pointing to a turnaround," Mr Popp said.

Many German construction companies have a strong international presence, and business is mainly being stimulated from outside Germany. But VDMA said the domestic market was developing "very well", with growth rates in incoming orders and sales above those in other countries.

Supply chain concerns

VDMA also highlighted the fact that German manufacturers are concerned about their suppliers, many of which are struggling with fluctuations in demand.

It said companies from all sectors were reporting bottlenecks in the delivery of components and problems with quality. "Also, price increases are often far from plausible," VDMA added.