In 2017, the French mechanical engineering industries recorded sales of €127.8 billion, an increase of 3.3 % on the previous year. Growth is clearly accelerating...e quarter 2017, mainly driven by exports, which is set to increase in 2018.
A still dynamic domestic market
Domestic demand grew by 3.8 % in 2017. The suramortissement scheme introduced in 2016 continued to have a positive impact on the domestic market, even though it came to an end in April 2017. The main investments relate to the renewal of machinery and technical upgrades of machines linked to safety and the environment. The shift to the Industry of the Future is well underway, and the mechanical engineering industries are modernizing to move upmarket and gain in export competitiveness. By way of example, sales of industrial robots on the domestic market rose by 29 % in 2017 compared with the previous year.
Growing exports
French mechanical engineering retains its 6e position worldwide in 2017, behind China, the United States, Japan, Germany and Italy. The clear upturn in foreign demand enabled mechanical engineering manufacturers to achieve international sales of €49.8 billion in 2017, up 3.2 % on the previous year. The export rate reached 39 % in 2017. Sales to the 27 member countries of the European Union accounted for more than half of total exports (56.2 %).
Sector trends
All three mechanical engineering sectors benefited from the recovery:
- Metal processing grew by 2.6 % in 2017.
- Mechanical equipment recorded an increase of 2.3 %, comparable to 2016 (+ 2 %).
- Production in the precision sector jumped by 8.7 % compared with 2016.
Recruitment essential to keep pace with growth
Mechanical engineering, 1er France's industrial employer (with around 20 % of industrial employment), had 615,000 employees in 2017, a very slight decrease (- 0.6 %) on the previous year.
This trend is set to reverse in 2018. Faced with rising demand, France's production base is showing signs of strain. A third of manufacturers believe that they would no longer be able to meet a surge in demand without recruiting (+5 points year-on-year, a level unseen since the crisis). Yet 42 % of business leaders report problems hiring qualified staff (source Insee - October 2017), which could penalize their growth.
A positive outlook, but with reservations
The acceleration in growth in recent months augurs well for continued investment in 2018. Estimated by Insee at +4 1TP6Q, it should further support activity linked to the domestic market and benefit from the good economic climate in key customer sectors such as automotive, aeronautics and chemicals.
A rise that will also be sustained on the export front: according to manufacturers, foreign demand improved significantly in January 2018, particularly for capital goods manufacturers. This acceleration can be explained by global economic growth.
Nevertheless, manufacturers will not be able to take full advantage of this favorable economic climate and restore their competitiveness as long as production taxes remain as high as they are today. For Bruno Grandjean, President of FIM, France is starting from the wrong diagnosis: " a tax system favorable to innovation but unfavorable to production. The French ecosystem is not conducive to Made in France. The punitive taxation of factories is unique in Europe. The CVAE (cotisation sur la valeur ajoutée des entreprises) and CFE (cotisation foncière des entreprises) tax companies even before they make a profit. Worse still, they penalize companies that invest. FIM would like to see these two taxes transformed into a supplement to corporate income tax, as in Germany. "
In addition, the rising cost of raw materials remains a cause for concern, particularly for capital goods manufacturers (+12 % on average for steels over 2017 and +16 % for non-ferrous metals).
Against this economic backdrop, the Federation estimates a rise in activity for the mechanical engineering industries of around 3 % in 2018.
Learn more: www.fim.net