Due to the sharp decline in Italian domestic orders and exports in the second quarter of this year, the future expectations of Italian machine tool manufacturers are hardly optimistic. Orders have begun to decline in 2011, continuing this trend in the first quarter of 2012. The Italian Manufacturing Technology Developers and Suppliers Trading Group (UCIMU) stated that orders for machine tools in the second quarter of 2012 decreased by 20.6% from the same period of last year.

So far, strong demand from other countries has kept Italian machine tool builders growing. However, UCIMU has warned that in recent months, its members are more concerned about the weak domestic market demand, and it is a bad sign for the national industrial sector as a whole.

UCIMU stated that the domestic order index in the second quarter of 2012 was down 11.5% from the same period of last year. This result shows that domestic demand is weak and UCIMU believes that the structural crisis in the Italian market has greatly reduced its investment in production technology. The export orders index for the second quarter of 2012 was 23% lower than the same period in 2011.

UCIMU Chairman Luigi Galdabini stated that Italian machine tool builders are very worried about the current situation, and even more worrying is the decline in domestic demand, and this trend has now become structural.

However, if we take into account the larger base factor in the second quarter of 2011, although the decline is significant, the reduction in export orders is still within an acceptable range.

At the annual meeting held in June, UCIMU still insisted on its forecast of 2012 orders growth of 12.3% year-on-year.

Galbadini stated that the new tightening policy of the Italian government will cancel the financial support for the export of Italian manufacturing equipment, which is unacceptable. The association formally requested the cancellation of the policy to encourage more Italian manufacturers to obtain global orders.

In addition, given the weak domestic demand, UCIMU is seeking “immediate direct intervention” from the Italian government to maintain its competitiveness.

Galdabini stated that the government has stopped reform of its manufacturing structure in view of the country’s risk of industrialization. The government authorities should plan to introduce decision-making assessments, such as reducing taxable income to 50% of the value of investing in new machines. However, it should also be realized that reducing costs may not be sustainable government fiscal measures, and manufacturers require at least the introduction of any depreciation of capital goods. This measure will allow users to allocate the depreciation of purchased goods in a relatively short period of time. From a medium-term perspective, it will have no effect on the state treasury, because the tax owed will only be postponed.