Machinery: premium segments have been growing in 2023

The 2023 closing pre-estimates formulated by StudiaBo and available in the ExportPlanning Information System document an overall result of decline in euro values (-1.6%) of the world trade of machinery and plants for industry¹, which is even more intense when measured at constant prices ( -8.2%).

In 2023, a demand for technology appears to have favoured purchases of higher quality machines

The significant growth in global high-price flows

However, as the graph below highlights, 2023 saw a significant growth in high price range flows² (+21.1% in euro values), representing almost 41 percent of the entire world trade in the sector (from 32.6 percent in 2022).

It is a phenomenon that recalls what already happened in the previous negative cyclical phase of the sector, i.e. in the pandemic year 2020, when - in the face of an overall decline in world trade - there had been a fly-to-quality in global demand for machinery and plants for industry, with global high-end price flows in positive contrast and going from 27.2% to 45.9% of the total (see the table below).

World Trade of Machinery by Price Ranges
(shares at current prices)

In 2023, client companies did indeed reduce their investments in machinery, but by reducing medium-low-price ranges (mainly intended for increasing production capacity) and not higher ones (mainly intended to improve competitiveness)

Returning to 2023, the ExportPlanning pre-estimates document a worldwide demand for high-end machinery which is expected to exceed 140 billion euros at the end of the year (new absolute maximum point, approximately 10 percentage points higher than the previous maximum [year 2020]).

On the other hand, global trade in the industry attributable to the Medium/Medium-High and Low/Medium-Low price ranges experienced declines in euro values of similar intensity (-14.5% in the first case, -14.9% in the second), falling to 36.2 and 23.2 percent of overall demand.

In other words, companies have indeed reduced their investments in machinery in 2023, but by reducing those of medium-low price (mainly intended to increase production capacity) and not those of higher price (mainly intended to improve competitiveness).

Competing countries "winning" and "losing" in the high price range

In this context, the particularly favorable performances of some competing countries operating in the high price range stand out: Germany (+10.8 billion euros estimated at the end of the year compared to 2022 in terms of increased exports of the sector in the high price range, placing it in first place overall in the world ranking of high-end exporters in the industry), < b>Italy (+3.3 billion euros), Canada (+1.7 billion €), Switzerland (+1.5 billion €), Netherlands (+1.4 billion €) and Austria (+1 billion €) are the main exporters growing in 2023 in the high price range.< /p>

On the other hand, we note - despite a favorable context - the largely negative performance of exports of high-end machinery by United States and Japan (for both -2.7 billion euros compared to 2022).

Conclusions

To summarize, therefore, the phase of uncertainty in the international economy that occurred during 2023 (and already started in the second part of 2022) has led manufacturing companies to face an increased selectivity of the demand framework at an international level this year.
The consequence was probably to block projects aimed at increasing production capacity, while safeguarding those aimed at improving the company's competitiveness.

This phenomenon appears similar to what happened during the previous crisis (Great Lockdown) in 2020, when - in the face of an overall reduction in global demand for industrial machinery and plants (-6.2% in euro values) - sales of the high price segment recorded a significant increase (+58% in euro values).