#MFG Global Perspective: Central & Eastern #Europe

Hubert Sawicki, AMT Consultant on Central & Eastern Europe, reports:

Last month in Europe was primarily about exhibition activities in two particular markets: Hungary and Russia.

Hungary is currently focused on getting the economy growing again. With the right local representation and perseverance, and in spite of its size, the market can contribute nicely to suppliers with a purpose of increasing their European business. Mach Tech in Budapest is the largest specialized exhibition for mechanical engineering and welding technology in Hungary. International trade fair exhibitors use this show to display their latest machines, materials and innovations. This year 385 exhibitors, 19 countries, and 15,000 visitors attended Mach-Tech. More than a dozen AMT members were represented at the show and declared it a success. The brand name for the Hungarian engineering manufacturing market is precision, so companies focused on measurement technology are doing well here.

Unfortunately, the forecast for Russia is not so optimistic. The Russian market has become a quagmire. A combination of Western restrictions on technology transfer, insufficient money supply (especially to sectors of industry controlled by the government), a weak Ruble, and the political stubbornness of the Russian administration makes the lives of engineering suppliers and Russian users very difficult. The 16th annual Metalloobrabotka, a 5-day event held last month in Moscow, is a good example. This year’s event, which showcases equipment, instruments and tools for the metalworking industry, had smaller exhibits, fewer machines from abroad on display, and fewer visitors. At the same time, however, the effort that went into make the show a quality presentation was obvious. Some stats from the show’s organizers: 940 exhibitors, half foreign (1036 in 2014); 32 countries (35 in 2014); 26,000+ visitors (29,000 in 2014); and 38,000 sq. meters of exhibit space (40,000 in 2014). In 2014, Russia surprisingly remained fourth among the world importers of machine tools (valued at 1,869M USD in 2014) but, during the Moscow exhibition, stories were swirling about orders cancelled or delayed by Russian customers, virtual stagnation in new orders in 2015, and sanctions hitting not only the defense complex but also oil and gas sections.

The show was a mixed bag for AMT members because of the reasons noted above, but there is good news coming from the distributors of tools, measuring equipment, and software with several doing very well and not feeling any squeeze because of the origin of their products as some builders obviously felt. Large international companies with a strong European (and even Russian) infrastructure, noted drops in their business, but assume that they have to be prepared for a 2-year lull in their Russian business. There are better times ahead for the Far East companies, though, particularly those pursuing the “assembled in Russia” type of agreement. This road is perhaps unavailable to the U.S. manufacturers; however, those involved in machine tool equipment/accessories and tools might want to test the Russian market more, as there is less risk associated with export licensing and less local competition. The president of the Russian Association of Machine Tool Producers (Stankoinstrument) has said that the Russian industry is less capable of producing such products locally to replace imports, and that their only hope would be the small and medium-sized businesses in Russia. But so far, this sector is also rather underdeveloped.

Finally, Expocentre (the show’s organizer) and Stankoinstrument were appreciative of my very short visit to Metalloobrabotka and expressed their desire to continue working together as a machine‐building community. It also allowed me to maintain contact with Russian distributors, and to find a few potential openings for AMT members.

Stayed tuned.

Categories: Global Services

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