Vitrum: Worst not quite over for European industrial production

Based on a report by Federmacchine, it seems that the first half of 2009 was marked by a 31.9 percent collapse in Italy’s industrial production, with a 9 percent reduction in the second quarter, compared to the first, according to an Oct. 29 Vitrum release. The blow to businesses, and to the nation’s economy, is shocking given that this sector is one of the mainstays of "made in Italy" manufacturing and accounts for nearly 8 percent of Italy’s overall economic value.

It is the consequence of a huge financial crisis and not a crisis within the industrial system. The economic woes are being felt throughout the entire Western world and, to a degree, in the so-called emerging markets. Fortunately, only partially in the emerging markets, because that’s where the signs of a faint recovery are beginning to emerge.

Exactly which countries are these? Certainly the ones known as "BRIC," with some reservations surrounding the 'I' for India and some caution around the "R" for Russia. “Brazil is the country of the future, because it maintained a strong rate of growth, and all the potential for development demonstrated in recent years is still intact," said Michele Gusti, managing director, Ocmi Otg and president, Gimav’s Hollow Glass Group, in the release. "Like China, where even though the growth rate has dropped from two figures, it has settled comfortably at a more than decent 9 percent approximately. It’s true that represents a 20 percent drop in growth, but still in a setting of great economic vitality and strong support of investments. Russia, too, is taking off again, but at a much slower pace. India, on the other hand, from our hollow glass point of view, is a disappointment because the demand for high-quality products remains low.”

The stamina and confirmed vitality of the emerging markets has already been echoed as an
upward trend in Europe, especially in Germany, which celebrated a 1.4 percent increase for the month of August in orders for the sector, fortifying hopes for growth in the third quarter, according to the release. A fact confirmed by Aldo Faccenda, CEO, Bottero Group: “In Europe, Germany is still the driving force, followed at a short distance by France. The signs of an awakening are clear; orders are starting to move into the sector, even though there are still problems in the automotive and building sectors, but we can say that the wheel is starting to turn in the right direction.”

The worst is not behind us yet, considering that the machinery-manufacturing sector in Italy is experiencing a 56 percent downturn, matched by an estimated average decline of 35 percent-40 percent globally. “In theory, we can say we have hit rock bottom and are now starting to move back up, but the underlying reality is more complex and paints a less rosy picture," Gusti said in the release. "Orders taken in 2008 were rich and abundant and made it possible to keep the ship on course despite the difficulties experienced in 2009."