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How is the German railway industry performing during Corona? Strong turnover vs. drastic slump in orders from abroad

Siemens Mireo production in Krefeld - in the first half of 2020 order intake for vehicles was lower than in 2019 I © Siemens Mobility

The German Association of the Railway Industry (VDB) e.V. presented the results of the first half of 2020: With a turnover of 6.4 billion Euros the railway industry in Germany achieved a record value in the period under review. Compared to the previous year, this figure is up by 25.5 percent. “A plus which reflects the high order intake of the last two years and above all the resilience of the railway industry in Germany. Our supply chains have held up along the entire value chain, from system houses to medium-sized companies. Despite worldwide shutdowns”, said VDB President Andre Rodenbeck. The domestic business increases by 18 per cent. The export turnover is also growing by 39 per cent and thus still accounts for about 40 per cent of the total turnover. The vehicle business remains the strongest with a turnover of 4.4 billion euros and a plus of 26 per cent. The infrastructure sector is also growing by 25 per cent. The employment figure remains stable at 53,100 employees. “An excellent turnover balance, especially in times of crisis. But I warn against closing the books too quickly here. The production of our companies today reflects the full order books of previous years. Consequently, our industry will only feel the impact of the crisis in the course of this year and subsequent years,” warned Rodenbeck.

Development of turnover and new orders in the German railway industry since 2001 I © VDB

Incoming orders, for example, will fall by 6.3 percent to 7.5 billion euros. While the order situation on the domestic market is rising by 18 percent, foreign orders are slumping dramatically. At 2.3 billion euros, incoming orders outside Germany are down 36 per cent. Orders from abroad in the automotive sector even shrank by 53 per cent. “As a global export industry, we view the order prospects on the world market with great concern,” says Rodenbeck. “I see two main reasons for the negative trend in exports. Firstly, public investments in rail projects abroad are being partly cut back, postponed or put on hold due to the crisis.

Even in times of Corona, substantial investments were made in the infrastructure – installation of a switch on the high-speed line Mannheim – Stuttgart I © Deutsche Bahn AG / Markus Kehnen

And secondly, export orders are closely linked to local consultations, which are often hardly possible any more. Effective crisis policy must combine a very high level of protection with the lowest possible economic impact,” says Rodenbeck. Travel restrictions would have to be better coordinated throughout Europe and necessary worldwide business trips would have to be secured by sufficient test capacities, especially at airports. The aim was to reduce avoidable serious negative consequences for export-oriented companies through better implementation and EU-wide coordination, said Rodenbeck.

Comparison of turnover between 2019 and 2020 I © VDB

Digitalisation offensive for the Green Re-Start

Furthermore, targeted basic investments in a digitisation offensive are crucial. “Investments in the accelerated digitisation of the railways and in alternative drives can combine previous antagonists: climate protection and economic growth”, said Rodenbeck. The economic stimulus package provides for the bringing forward of investments in digital infrastructure, on the basis of which VDB proposes a fast-running programme for an early start of the area roll-out of the digital rail in Germany. “This can trigger short-term economic and employment effects and at the same time lay the foundations for a climate-friendly mobility in Germany”, said Rodenbeck. According to projections, the high-speed programme could create the basis for up to 10,000 industrial jobs. The programme aims to create the technical basis for the further digitalisation and automation of the railways by replacing and upgrading outdated interlocking systems. The German government’s economic stimulus package and the EU’s Recovery and Resilience Facility would provide a strong financial basis for massively advancing digitisation in 2020 and 2021 in a 360-degree approach – from automation (ATO) and predictive maintenance to smart factories or more customer-friendly, state-of-the-art stations.

At least in the rail vehicle industry there has been a sharp drop in orders I © VDB

Contract award reform for the Green Re-Start

“Targeted basic investments must significantly increase the pace. But not only a lot has to be invested, but above all wisely”, said VDB Chief Executive Officer Dr. Ben Möbius. An earmarking of state investments against the economic consequences of the corona crisis to sustainability and European production is urgently necessary to get innovative solutions on track worldwide. For the Green Re-Start in Europe, from Europe.

Source: VDB

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