Analysis of the Italian machine tool market in the second quarter of 2012

Due to the sharp decline in domestic orders and exports in the second quarter of this year, the future expectations of Italian machine tool manufacturers are hardly optimistic. Orders started to decline in 2011, and the trend continued in the first quarter of 2012. Italian manufacturing technology developers and suppliers trade group UCIMU said machine tool orders in the second quarter of 2012 fell by 20.6% compared to the same period a year earlier. So far, strong demand from other countries has kept Italian machine tool makers growing. However, the UCIMU has warned that in recent months its members have been more concerned about weak demand in the domestic market, and that is a bad sign for the country's industrial sector as a whole. UCIMU said that in the second quarter of 2012, the domestic order index fell by 11.5% compared with the same period of the previous year. This result points to weak domestic demand and UCIMU believes that the structural crisis in the Italian market has significantly reduced the level of investment in its production technology. In the second quarter of 2012, the export order index fell by 23% compared with the same period in 2011. UCIMU President Luigi Galdabini said that Italian machine tool manufacturers are very worried about the current situation, and even more worrying is the decline in domestic demand, which has now become structural. However, if we take into account the large base in the second quarter of 2011, although the decline is significant, the reduction in export orders is still within an acceptable range. At its annual meeting in June, UCIMU stuck to its forecast of a 12.3 percent year-on-year growth in orders for 2012. Galbadini said it was unacceptable that the Italian government's new austerity policy would remove financial support to promote the export of Italian-made equipment. The association formally called for the policy to be lifted to encourage more Italian manufacturers to secure global orders. In addition, UCIMU is seeking 'immediate and direct intervention' from the Italian government to maintain its competitiveness, given weak domestic demand. According to Galdabini, the government has halted structural reforms of its manufacturing industry, considering the risk of de-industrialization of the country. Government authorities should plan to introduce decision assessments such as reducing taxable income to 50% of the value of the investment in new machinery. However, be aware that cost reduction may not be a sustainable government fiscal measure, and manufacturers require at least the introduction of arbitrary depreciation of capital goods. This measure will allow users to distribute the depreciation of their purchases over a shorter period of time, and in the medium term, there will be no impact on the state treasury, as owed taxes will only be delayed.