Policy issues at European level affecting the mechanical engineering industry are handled by Orgalime's Mechanical Engineering Liaison Committee (MELC) and technical issues are dealt with in detail by the Technical Harmonisation Group (THG).
Mechanical engineering is one of Europe’s largest industry sectors with a share of some 9% of total EU manufacturing output. Its value of production amounted to €588 billion in 2007. It is also one of the largest employers with some 169 000 companies (mostly SMEs) employing 3 million people. The total volume of production for 2009 at world level amounts to €1380 billion, Europe being the world's largest producer and exporter of machinery with 35% of the world market (China accounts for 25%) in 2009.
Mechanical engineering is an essential part of the industrial fabric of Europe. It is not only a supplier of capital goods to all other sectors of the economy, but it is also a significant consumer and provider of materials produced by the primary industries and increasingly a consumer and provider of services. Moreover, mechanical engineering provides not only the equipment, but also the skills and knowledge for improving existing processes and for developing new products in other industries. Its prime customer is the manufacturing industry. It is a highly cyclical industry whose performance depends on the investment cycles of its clients.
Mechanical Engineering is a very wide and diverse sector. The main sub-sectors as defined in the NACE nomenclature are:
- Machinery and equipment (chapter 28.1. NACE Rev 2)
- Machinery for the production and use of mechanical power, pumps, compressors, taps, valves, except aircraft, vehicle and cycle engines (chapter 28.1 NACE Rev 2)
- Other general purpose machinery (chapter 28.2 NACE Rev 2)
- Agricultural and forestry machinery (chapter 28.3 NACE Rev 2)
- Machine tools (chapter 28.4 NACE Rev 2)
- Other special purpose machinery (chapter 28.9 NACE Rev 2)
Mechanical engineering cover an enormous array of machinery, such as lifting and handling equipment, machine tools, textile machines, agricultural machinery, construction equipment, transmission technology, compressors, pumps, heating ventilation and air conditioning equipment, combustion engines, windmills, etc.
NB: The activities referred to in the following graphic are based on the 2007 production and therefore to the NACE rev. 1 as the NACE rev. 2 is only applicable as from 1 January 2008.
ORGALIME mechanical engineering industry
by sectors - 23 member countries
Production
The European mechanical engineering industry reached an annual value of production of about €450 billion in 2009. Employment is estimated to have reached 3 million employees.
This sector of the engineering industry that represents almost 9 percent of the value of industrial production in the EU plays a key role in the evolution of both competitiveness and productivity of industry in general. Among the most important customers is the manufacturing industry itself. It is a rather cyclical industry whose performance depends on the investment cycles of its clients.
The economic and financial crisis has affected industry of mechanical engineering more than any other sectors. Investment budgets were slashed and capacity utilisation fell dramatically in manufacturing industry, thereby reducing the market for investment goods.
Volume of production contracted by 20 percent in 2009.
The European mechanical engineering industry has suffered an extended period of low demand. As profits, utilization of equipment and production have improved, in combination with an ongoing implementation of new technology in investment goods, demand for machinery has risen. Strong extra-EU exports, especially to Asia and Latin America, have also contributed to growth. The volume of production is expected to grow by 4.3. percent in 2010
A number of sectors of machinery are doing well at present, especially machinery supplied to other manufacturing industries, including special purpose machinery. This reflects an upward trend in growth and a willingness of client industries to start investing again. A rather sharp upswing can be seen in other sectors of machinery and equipment, such as machine tools, over the last two quarters, but this is rising from a rather low level. Since this surge in demand started rather late in 2010, some machinery sectors might show a contraction on average of the year.
Activity in the machinery sector is expected to continue to be favourable. Investment plans in the engineering industry itself is positive for 2010. Many key customers and key industries that are important for the sector have also started to invest. The indicators point to a rather strong market both in the EU and on major non EU markets. The volume of production for the European machinery sector is therefore expected to grow more strongly, with growth in output reaching some 5.3 percent in 2011.
MELC and its subgroup THG have continued to actively defend the interests of the mechanical engineering industry both at the level of general industrial policy and other specific issues. This work is carried out through regular contacts with the officials of the EU institutions, in particular the Commission, the Council (working groups) and the European Parliament. Much of this work is carried out in close collaboration with European sector associations in the branch so as to reinforce the industry representation on issues of common interest.
Work carried out so far highlights a number of areas on which we believe we need to put more emphasis: research and innovation, investment promotion, market access and, above all, the framework conditions under which companies today have to operate in the EU. The issues of skills shortage, which is a growing problem, and the image of the mechanical engineering industry, are also on the table.
At a regulatory level there are a number of key issues being managed either in THG or in specialised task forces or horizontal groups, including:
Operation of the internal market:
Health and safety legislation:
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