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38 MoldMaking Technology —— APRIL 2017 INTERNATIONAL PERSPECTIVE European Trend Report: Optimism Prevails Eurozone manufacturing is off to a strong start to the year, enjoying the fastest rate of expansion for almost six years in January. By Barbara Schulz "We expect Germany's toolmaking sector to grow by 4 percent in 2017, driven by demand from the United States and China," says Udo Fenske, vice chairman of the German Engineering Federation's Die and Mould Association, which also is part of the federa- tion's Precision Tools Association. The German Engineering Federation (VDMA) represents more than 3,200 mostly medium-sized compa- nies in the capital goods industry, making it the largest industry association in Europe. Fenske is not alone in his opinion about growth this year. Manuel Oliveira, the European secretary general for both the Portuguese Association for the Mould Industry (CEFAMOL) and the International Special Tooling and Machining Association (ISTMA), is also opti- mistic about Portugal's moldmaking industry in 2017. While there are no final figures available for last year, the latest figures from CEFAMOL forecast 6 percent growth in exports in 2016. According to Oliveira, if this forecast is confirmed, 2016 will be the best year ever for the Portuguese moldmaking industry, and shops are expecting new projects from primarily automotive clients in 2017. "The Portuguese industry will maintain this level of activity by using installed capacity in terms of engineering, product design, prototyping and moldmaking capabilities, and by broadening the chain of value, investing in new technologies, and developing partnerships with clients, suppliers and associations," he says. Oliveira adds that there is a whole range of possible economic, political and social scenarios, such as Brexit and U.S. President Trump's import taxes, that could cre- ate international instability affecting Portugal as an export-driven industry. For example, if the United States imposes import taxes on finished goods not made in the U.S. (this could also include nonfinished products such as molds) and Portugal exports 86 percent of its molds. Also according to CEFAMOL, while exports to North America have stagnated over the last couple of years, demand from the U.S. is increasing due to its re-industrialization efforts and a decrease in local mold production, as well as a more favorable exchange rate. German machine tool builders export 66 percent of their machines, mostly to China, and because the U.S. is the world's second most important machine tool market, satisfying 60 percent of its demand via imports, there are concerns about how trade may be affected with the current politi- cal uncertainties. However, according to Dr. Heinz-Jürgen Prokop, chairman of the German Machine Tool Builders' Association (VDW), the machine tool industry is, to a great extent, decoupled from general market trends. For example, look at China. Contrary to the general market trend, German machine tool builders increased their order intake by 50 per- cent in the first nine months of 2016 due to automotive proj- ects and its supply industry. Also, if President Trump wants to create 25 million jobs over 10 years, including high-paying factory positions, to return factory production to its heyday, he will depend on high-tech production technology from abroad, especially from Germany, as U.S. machine tool manufacturing has greatly decreased, Prokop says. Therefore, Prokop is not concerned that demand from the U.S. will slow in the medium term. However, Mexico is an issue. Although the market flour- ished in 2015 (exports of German machine tools increased by 75 percent in 2015, decreased again by 11 percent last year) because of huge automotive projects, President Trump's threat to pull the U.S. out of NAFTA, which includes Mexico and Canada, if he cannot negotiate more favorable terms, is of great concern to Germany and Europe. For 2017, VDW expects 3 percent growth in production, which corresponds to the forecast from VDMA's Precision Tools Association. While Chairman Lothar Horn agrees with Prokop that political uncertainty in some of Germany's major export markets are expected to pose challenges, he is still opti- mistic for the current year.