September 24, 2020
The economies and industries of Europe were hit hard by the effects of the pandemic and are only now stabilizing a bit and starting to turn around. The auto industry is still upside down due to excess capacity but defense, aerospace, and medical are better poised for recovery. GDP forecasts for 2020 for the Eurozone have been upgraded, and the PMI has just edged up over 50%. For more intel, read on.
As of mid-September, the decline of industrial production in Europe seems to have slowed. For the EU, it was -7.7 % YOY, better than the forecasted -8.2% and markedly better than the double-digit figures of prior months.
The end of the year GDP forecasts have been marked up to -8% for the Eurozone, -9% for the U.K. and -4.7% for the emerging markets of Eastern Europe.
The airlines continue to struggle, and flights are down. However, the relevant aerospace technology business continues to grow, particularly for European companies working with U.S. manufacturers.
U.K.-based BAE Systems has received a contract from Aerion Supersonic in California to supply the flight control system for its new AS2 supersonic business jet.
BAE Systems is also collaborating with U.S. start-up company Jaunt Air Mobility, founded in 2018 in New Jersey, to explore the development of electric urban air mobility vehicles.
A joint venture between BAE Systems and Prismatic, another U.K. company, designed, built, and recently test flew an unmanned solar-powered aircraft in just 20 months. Dubbed the PHASA-35, the aircraft can remain airborne for a year and deliver communications, surveillance, and remote sensing. It is to provide services for border protection and disaster relief at a much cheaper cost than using satellites. The PHASA-35 was tested in southern Australia and weighs only 330 lbs. and has a wingspan of 115 feet.
Airbus announced three new zero-emission concept aircraft powered by hybrid hydrogen turbofan and turboprop engines. The France-based company is positioning itself to lead the way in the decarbonization of the aviation industry.
U.K.-based Easy Jet is collaborating with U.S.-based Wright Electric to develop engines for electric narrow-body aircraft. Electric planes will only be able to fly relatively short distances but could play an important role in the aviation industry's push to cut its carbon emissions.
Of the 298 automobile assembly and engine production plants in Europe, 196 are within the EU. Most are in Germany (25), U.K. (19), Russia (16), France (13), and Italy (11). In 2019, they manufactured over 18.5 million vehicles. YOY vehicle registration is down 32%, indicative of the present excess capacity in this sector as consumers continue to shy away from new auto purchases.
With just 15 weeks before the Brexit transition period expires, European automotive industry leaders joined forces to call on the EU and U.K. to secure an ambitious free trade agreement (FTA) without further delay. Negotiators on both sides must now pull out all the stops to avoid a “no deal” at the end of the transition, which, according to new calculations, would cost the pan-European automotive sector some $128 billion in lost trade over the next five years. The auto industry supports 14.6 million jobs, or 7% of all jobs in the EU and U.K.
As expected, machine tool orders are down except for used machinery. Present and anticipated financial restraints are affecting capital investment in all industrial sectors with the exception of defense and medical.
For more information on European manufacturing, please contact Hubert Sawicki at HSawicki@AMTonline.org.