Archive:Machinery and equipment production statistics - NACE Rev. 1.1
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- Data from January 2009. Most recent data: Further Eurostat information, Main tables and Database.
This article introduces a set of statistical articles which analyse the structure, development and characteristics of the economic activities in the machinery and equipment sector in the European Union (EU), except for transport equipment. According to the statistical classification of economic activities in the EU (NACE Rev 1.1), this sector covers NACE Division 29.
This sector of the industrial economy provides equipment for use in many mining, manufacturing, energy and construction sectors, as well as producing domestic appliances. Furthermore, the machinery and equipment manufacturing sector covers arms and ammunition, whether for military or sporting uses, including some military vehicles such as tanks, but not military aircraft or warships (which are classified under the manufacture of transport equipment – see Transport equipment production statistics - NACE Rev. 1.1).
The activities of the machinery and equipment sector are treated in more depth in five further articles:
- General purpose machinery production, corresponding to NACE Groups 29.1 and 29.2;
- Agricultural and forestry machinery production, corresponding to NACE Group 29.3;
- Industrial processing machinery production, corresponding to NACE Groups 29.4 and 29.5;
- Arms and ammunition production, corresponding to NACE Group 29.6;
- Domestic appliances production, corresponding to NACE Group 29.7.
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Main statistical findings
Structural profile
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Machinery and equipment manufacturing (NACE Subsection DK) was the core business activity of 174.0 thousand enterprises across the EU-27 in 2006. These enterprises provided employment for 3.6 million persons in the Member States, corresponding to 2.8 % of those employed in the EU-27’s non-financial business economy (NACE Sections C to I and K) in 2006. The EU-27’s machinery and equipment manufacturing sector generated turnover of EUR 621.3 billion in 2006, of which a little less than one third (31.0 %) remained as added value; the EUR 192.6 billion of value added generated by the sector in 2006 corresponded to 3.4 % of the total value added within the non-financial business economy.
Within the subsectors of machinery and equipment production, the manufacture of general purpose machinery (NACE Groups 29.1 and 29.2, as presented in General purpose machinery production statistics - NACE Rev. 1.1) was the largest in terms of wealth creation, accounting for about one half (52.2 %) of the value added generated in the EU-27’s machinery and equipment manufacturing sector. The next largest subsector was that of industrial processing machinery (NACE Groups 29.4 and 29.5, as presented in Industrial processing machinery production statistics - NACE Rev. 1.1), which generated just over one third (34.0 %) of the value added of the machinery and equipment manufacturing sector. By way of comparison, the contributions made by the activities presented in the remaining three subsectors (Agricultural and forestry machinery production statistics - NACE Rev. 1.1, Arms and ammunition production statistics - NACE Rev. 1.1 and Domestic appliances production statistics - NACE Rev. 1.1) were relatively small, none contributing more than 7 % of sectoral value added in 2006.
Machinery and equipment manufacturing activities in Germany made the largest contribution (36.6 %) of any Member State to EU-27 value added within this sector in 2006. Indeed, German value added was more than twice that of the second largest contribution (16.2 %) from Italy. No other Member State[1] generated a double-digit share of EU-27 value added. Among the subsectors of machinery and equipment production, Germany was the largest manufacturing Member State in value added terms for all but one of the machinery and equipment manufacturing subsectors, the exception being the manufacture of arms and ammunition (NACE Group 29.6, see Arms and ammunition production statistics - NACE Rev. 1.1). The value added generated by the machinery and equipment manufacturing sector in Germany accounted for 6.1 % of its non-financial business economy value added total in 2006, which was the highest share among any of the Member States and much more than the EU-27 average (3.4 %) in 2006. In comparison to most other Member States, Italy and Finland were also relatively specialised in machinery and equipment manufacturing, as this sector provided 4.9 % and 4.7 % respectively of their non-financial business economy value added.
The map shows the contribution of the machinery and equipment manufacturing sector to employment within the non-financial business economy (NACE Sections C to I and K) of each region. This sector was unsurprisingly particularly important in a number of German regions and in four of them (Unterfranken, Tübingen, Stuttgart and Schwaben) provided employment for about one in every nine or ten people within the non-financial business economy workforce. There were also a number of regions in the Czech Republic, Italy, Slovakia, Finland and Sweden that were also particularly specialised in this sector.
For much of the period between 1997 and 2007, the EU-27’s production index for machinery and equipment manufacturing followed closely the development for industry (NACE Sections C to E) as a whole. Differences were principally restricted to the first and last two years of the period; the output of machinery and equipment manufacturing remained relatively stable between 1997 and 1999 when industrial output rose, but increased much more sharply than industrial output in 2006 and 2007. Over the ten-year period, the output of machinery and equipment manufacturing rose by an average 2.6 % per annum in the EU-27, which was faster than the rate (2.1 % per annum) for industry as a whole. Among the NACE groups that make up the manufacture of machinery and equipment, growth in the production index for the manufacture of power machinery (NACE Group 29.1) was strongest in the period between 1997 and 2007 (an average 3.2 % per year).
The EU-27’s index of domestic output prices for machinery and equipment manufacturing rose continuously throughout the ten years through until 2007, at a remarkably steady rate as prices rose by an average of 1.5 % per annum. This contrasted with the more uneven development for industry as a whole, for which there were some declines in output prices in 1998 and 1999 (compared with a year before) and much stronger price increases in the period between 2005 and 2007. There were steady annual price rises in line with the average for development for machinery and equipment manufacturing as a whole for all the NACE groups that comprise machinery and equipment manufacturing, with the exception of the domestic appliances subsector (NACE Group 29.7), for which prices remained relatively unchanged through until 2005 before relatively modest price increases through to 2007. It should be noted that data are not available for the price developments of arms and ammunition manufacturing (NACE Group 29.6).
About one half (50.7 %) of the value added generated across the EU-27’s machinery and equipment manufacturing sector came from its small and medium-sized enterprises (SMEs employing less than 250 persons), which was a slightly lower proportion than the average for the EU-27’s non-financial business economy (57.9 %). The relative contribution of the value added of enterprises within the machinery and equipment manufacturing sector tended to increase with size, which was not the case across the non-financial business economy. In part, this reflects the relatively small proportion (6.3 %) of value added generated by micro enterprises (those employing less than 10 persons) within the machinery and equipment manufacturing sector in comparison to the share (21.0 %) generated by all micro enterprises within the non-financial business economy. There were a few Member States where large enterprises within the machinery and equipment manufacturing sector generated a majority of sectoral value added within the machinery and equipment manufacturing sector, among which Bulgaria, Germany and Romania were the most noteworthy.
Employment characteristics
A much higher proportion of the workforce of the EU-27’s machinery and equipment manufacturing sector in 2007 were men (81.9 %) than was the case across the non-financial business economy as a whole (64.9 %). This was a characteristic noted in all of the Member States for which data is available[2], although most notably in Cyprus and Estonia. In common with most industrial activities, a much higher proportion of the EU-27’s machinery and equipment workforce were engaged on a full-time basis (94.8 %) in 2007 than was the case across the non-financial business economy (85.7 %). This was also a characteristic noted among all of the Member States for which data is available[3].
About one in every five (20.1 %) workers within the EU-27’s machinery and equipment manufacturing sector was aged under 30 years, whereas such so-called young workers represented closer to one in every four workers (24.3 %) within the EU-27’s non-financial business economy as a whole. The relatively older profile of the machinery and equipment manufacturing sector was underlined by a higher share of workers aged over 50 years (25.1 % compared with 21.9 % for the non-financial business economy).
Expenditure, productivity and profitability
Only 1.8 % of all the tangible investment in the EU-27’s non-financial business economy (NACE Sections C to I and K) in 2006 was made in the machinery and equipment manufacturing (NACE Subsection DK) sector. This represented a much lower share than the contribution that this sector made to non-financial business economy value added (3.4 %). The corresponding investment rate for the EU-27’s machinery and equipment manufacturing sector was a little less than half the average across the EU-27’s non-financial business economy in 2006 (9.0 % compared with 18.4 %).
Purchases of goods and services accounted for just over three quarters (76.4 %) of operating expenditure within the EU-27’s machinery and equipment manufacturing sector. As such, the proportion of operating expenditure that went on personnel costs (23.6 %) was much higher than the average share (16.1 %) across the EU-27’s non-financial business economy in 2006. In part, this reflected the fact that average personnel costs of EUR 38.8 thousand per employee in the machinery and equipment manufacturing sector were about one third (34.8 %) or EUR 10.0 thousand per employee higher than the non-financial business economy average.
The average amount of value added generated per person employed in the EU-27’s machinery and equipment manufacturing sector was EUR 52.8 thousand in 2006, a little over a fifth more than the average for the non-financial business economy. However, after taking into account the relatively high level of average personnel costs, the wage-adjusted labour productivity ratio for the machinery and equipment sector fell well beneath the corresponding ratio for the non-financial business economy (135.8 % compared with 151.1 %). Among the activities presented in the subsectors of machinery and equipment production, even the highest wage-adjusted labour productivity ratio of 139.3 % for the manufacture of industrial processing machinery (NACE Groups 29.4 and 29.5) was notably lower than the non-financial business economy average.
The rate of profitability across the EU-27’s machinery and equipment sector was also relatively low; the gross operating rate was 9.2 % in 2006 compared with a rate of 10.8 % for the non-financial business economy. Again, none of the activities presented in the subsectors of machinery and equipment production had a gross operating rate that exceeded the average for the non-financial business economy in 2006, and in the case of the domestic appliances subsector (NACE Group 29.7) this ratio fell as low as 6.8 %.
External trade
The EU’s internal market accounted for a relatively small majority (55.6 %) of the EU-27’s total trade in machinery and equipment (CPA Subsection DK) in 2007. Trade with non-member countries generated a trade surplus of EUR 108.5 billion in 2007, by far the largest trade surplus of any CPA subsection for industrial (CPA Sections C to E) goods. It also represented a fourth consecutive annual widening of the trade surplus from a level of EUR 65.2 billion in 2003.
The EU-27’s trade surplus for machinery and equipment in 2007 reflected extra-EU-27 exports valued at EUR 193.4 billion (corresponding to 16.6 % of the value of industrial exports) and imports of EUR 84.9 billion (corresponding to 6.4 % of the value of industrial imports). Among the products presented in the subsectors of machinery and equipment production, the only trade deficit recorded in 2007 concerned domestic appliances n.e.c. (CPA Group 29.7) and this was relatively small at EUR 0.9 billion. In contrast, the EU-27’s trade surpluses for industrial processing machinery (CPA Groups 29.4 and 29.5) and general purpose machinery (CPA Groups 29.1 and 29.2) both exceeded EUR 50 billion.
In this growing export market for EU-27 machinery and equipment, the value of exports to the United States stabilised between 2006 and 2007. Although, the United States remained the largest export market for these goods in value terms, its share of the export market fell to 16.7 %. In contrast, the share of exports to Russia rose sharply to 9.3 %, moving it ahead of China as the EU-27’s second biggest export market in 2007. This change reflected a steep jump (28.9 %) in the value of machinery and equipment exports to Russia between 2006 and 2007. A little more than seven tenths (71.2 %) of all the imports of machinery and equipment into the EU-27 came from just four countries in 2007; the value of imports from China (21.3 % of the total) was almost identical to those from the United States (21.1 %), followed by Japan (16.0 %) and Switzerland (12.6 %).
Germany was the largest exporter of machinery and equipment in 2007, accounting for a third (32.5 %) of all intra- and extra-EU exports by the Member States. However, exports of machinery and equipment from Italy (valued at EUR 74.3 billion) represented the highest proportion (21.6 %) of national industrial exports in 2007, ahead of Germany (15.9 %). These two Member States recorded the highest trade surpluses for machinery and equipment; in Germany the surplus reached EUR 82.7 billion and in Italy it reached EUR 47.5 billion, dwarfing the next highest surplus of EUR 7.0 billion in the Netherlands.
Data sources and availability
The main part of the analysis in this article is derived from structural business statistics (SBS), including core, business statistics which are disseminated regularly, as well as information compiled on a multi-yearly basis, and the latest results from development projects.
Other data sources include short-term statistics(STS), the Labour force survey(LFS) and the COMEXT database for external trade.
Context
Technological advancements in the machinery and equipment that is used in other sectors of the economy (particularly in mining, manufacturing, energy provision and construction) can have a considerable impact upon the speed, quality and quantity of what is produced, thereby impacting on downstream productivity and profitability. The machinery and equipment sector is sensitive, therefore, to overall economic conditions and investment patterns both within the European Union and across the world (the two arguably being more intertwined than ever).