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Austrian Machinery and Metalware Industry continued to flourish in 2007

Austrian Machinery  © ADVANTAGE AUSTRIA


June 24, 2008

Production values and exports continue to show double-digit growth

Austrian companies in the machinery and metalware industry look back on a very successful year despite a weakened business cycle by the end of the year. In comparison to 2006 the total value of sold manufactured goods rose 11.2%; exports increased 15% with the European Union being the largest export market (75%). Robust trade relations with Eastern European countries have played a key role in Austria’s economic growth in recent years.

With the growth rate of 13.4% the machine building sector had the strongest performance in 2007, whereas the metalware sector lagged behind with a growth of only 7.2%. The driving factor behind this increase was a high volume of exports. According to the Association of the Austrian Machinery and Metalware Industries the industry achieved a trade surplus of €7.8 billion in 2007 versus only €7.2 billion in 2006.

Eastern Europe – great source of growth and profit

Austrian machine building and metal producing companies undeniably have great business intuition. Realizing great business growth potential in neighboring Eastern European countries, they entered the markets at the dawn of decentralization of these formerly socialist economies. By now most are firmly positioned on the markets; many have in part outsourced manufacturing and are now reaping the benefits of employing a highly-skilled workforce in the rapidly growing markets while enjoying lower business expenses.

Outsourcing is not viewed as a threat to the Austrian economy; in fact it’s just the opposite. The international production network boosts domestic growth. The recent survey “Engagement of the Austrian Machine and Metalware Industry in Foreign Markets” shows that 65% of the surveyed companies have been active internationally for more than 15 years. Over 40% of them state that more than 50% of annual sales are generated by their international production network. 90% of the surveyed companies named ‘market expansion’ as the main reason for their international activities, followed by ‘close proximity to customers’ (59%). Lower labor cost ranked only fourth (43%). The three most important conditions for successful international engagement are ‘highly-skilled personnel’ (95%), ‘solid market knowledge’ (94%) and ‘reliable business partners in the target country,’ (90%) according to the survey.

As the demand for machinery, tools and metal products continues to rise as the result of infrastructure development in Eastern European countries, so do the growth projections of Austrian companies. This trend, coupled with an economic boom in other development countries - Russia (+21%), India (+44%), Japan (+21%) and China (+18%) - will keep order books of Austrian companies full and guarantee further growth.

Outlook 2008

Despite the slower economy the outlook for the Austrian machinery and metalware industries is very optimistic. With increased revenues from last year and full order books, the industry has nothing to worry about in 2008.