Stayed on track
Turbulence and volatility in the market have increased over the last few years – and they are here to stay. In the process, valve manufacturers have proven in recent years how flexible and resilient they are positioned. The crisis has also been seen as an opportunity in the industry and used to drive forward the upcoming digitization. The industry is thus ready for further growth in the coming years – if it is allowed to.
BuildingsValves
Strong housing demand drives growth
Despite various crises, buoyant demand on the housing market has brought the German building valves industry almost continuous sales growth over the past four years. Nevertheless, there was little cause for euphoria, as capacity bottlenecks in the construction sector already limited growth in 2018. While sales growth was a meager 1 percent in 2018, it climbed to 3 percent in 2019. Even in the year of the Corona pandemic outbreak, the industry achieved a 2 percent increase in sales thanks to stable domestic business. Thus, although the industry had to contend with significant sales declines in April and May of 2020, it immediately swung to a rapid recovery course thereafter. In Germany, sales climbed by a strong 8 percent, while foreign business contracted by 4 percent due to Corona. In 2021, the German building fixtures industry picked up considerable momentum with an 8 percent increase in sales. In Germany, sales rose again by 6 percent after a good previous year. Abroad, sales grew by 10 percent.
Sales in the individual product groups developed at different rates in the period from 2018 to 2021. Technical building valves grew consistently in the period from 2018 to 2021. The situation changed in 2019 for heating valves, which had underperformed for several years up to and including 2018. Since then, the sector has been able to grow continuously. The situation is different for sanitary valves. Here, phases of slight growth alternated with phases of stagnation.
The production of building valves climbed from 4,509 million euros in 2018 to 5,133 million euros in 2021 .
Production
Building fittings
(in € million)
Source: Federal Statistical Office,VDMA
Development of exports building fittings
(in % compared to previous year)
Source: Federal Statistical Office, VDMA
Brand fittings
in demand abroad
Brand fittings made in Germany are popular abroad. They score points with unusual design, top quality and are also doing well in terms of environmental protection and Digitalization . With the exception of the corona year 2020, exports are therefore definitely a cyclical horse of the industry. Exports from Germany increased from 3,124 million euros in 2018 to 3,392 million euros in 2021, with the most important sales markets being France, China and the USA. Overall, Europe plays an important role for exports. More than half of exports go to the EU.
Chairman VDMA Gebäudearmaturen
Construction industry loses growth momentum
It was already apparent in 2019 that the boom in the German construction industry would sooner or later reach its natural limit. Capacity bottlenecks and a shortage of skilled workers were already making themselves felt at that time. Despite this, the construction industry has so far been able to remain steadily on an expansion course and also got through the crisis year of 2020 well, with households having sufficient financial scope to invest in new homes or renovation thanks to a high savings rate. In 2021, however, it became increasingly apparent that capacity bottlenecks in the construction sector are by no means a temporary phenomenon.
Restrained outlook
Supply bottlenecks, material shortages and rapid price increases for raw materials were already becoming increasingly apparent in the fall of 2021. The outbreak of war in Ukraine in the spring of 2022 further exacerbated the situation. As a result of the tough lockdown measures in China, major impacts are also expected. In addition, the shortage of qualified skilled workers in the skilled trades is becoming increasingly noticeable. Even though real estate investments are in demand, particularly in times of crisis, demand in Germany and Europe is threatening to level off in the wake of high inflation and rising interest rates. The outlook for the building valves industry is therefore subdued for the coming years.
Production
Industrial valves
(in € million)
Source: Federal Statistical Office, VDMA
IndustryValves
Broad customer structure as an advantage
Manufacturers of industrial valves can look back on turbulent years. Even in times of crisis, however, the industry sailed close to the wind and held its course. In principle, the industry often feels economic fluctuations with a slight delay.
The global economic slowdown did not leave the industrial valves sector unscathed in 2019. For example, after a very successful previous year with sales growth of 7 percent, German manufacturers of industrialValves only achieved an increase of 2 percent. In the corona year 2020, on the other hand, German manufacturers came through the crisis with a black eye. Sales remained at the previous year's level thanks to stable domestic business. The industry's broad customer structure once again proved to be an advantage. Losses in the oil and gas business were offset by gains in other sectors such as the pharmaceutical and food industries. In 2021, German manufacturers of industrial valves again recorded high order intake, but were unable to put it on the road as a result of supply bottlenecks. Sales growth was therefore only 1 percent despite a strong recovery abroad.
Sales developed differently in the individual product groups. Sales of safety and monitoring equipmentValves grew steadily in the period from 2018 to 2021. Control valves also grew with the exception of 2019. In the case of shut-off valves, the year 2018 and 2019 developed well, after which the division recorded sales declines in 2020 and 2021.
The production of industrial valves increased from 3,658 million euros in 2018 to 3,769 million euros in 2021.
Development of exports
Industrial valves
(in % compared to previous year)
Source: Federal Statistical Office, VDMA
Foreign trade
on the upswing again after Coronadelle
Traditionally, China is the most important customer for German industrial valves. However, the USA has continuously expanded its position as the second most important customer country in recent years. France follows in third place. Foreign business has been subject to a number of fluctuations in recent years. At times it was a driver of the economy, but turned out to be a drag in the wake of the Corona crisis. However, exports recovered dynamically thereafter.
Overall, they increased from €4,250 million in 2018 to €4,517 million in 2021.
Chairman VDMA Industrial Valves
Material bottlenecks slowed down
The full order books of the German valves industry would actually suggest that sales will increase in the coming months. However, for the time being, material bottlenecks combined with cost increases for intermediate products are clouding the outlook. Since 2020, the industry has been struggling with logistics difficulties. Container shortages and shipping congestion are making business more difficult and more expensive. The issue of purchasing has rapidly gained in importance. The issue of supply bottlenecks has recently intensified as a result of the Ukraine war and lockdowns in China.
Things are looking up in the long term
In the long term, however, the prospects are good. Industrial valves from Germany are traditionally characterized by quality and maximum reliability. These are prerequisites for long-term business success, especially in sectors such as the chemical and pharmaceutical industries, in power plant construction, and in the current growth market of hydrogen. In the course of restructuring the global energy supply, numerous projects are planned in Europe and the USA. The demand for energy is growing worldwide and promises good supply opportunities for German valve manufacturers.
