Dutch industry further ramps up production

The volume of new orders is still growing, but at a slower pace than in the previous month. New export orders have virtually come to a standstill. This may be related to the American import duties, which are set at 15 percent for many products. For steel and aluminium, a rate of 50 percent even applies.

Fortunately, the European Commission and the White House announced on Thursday, August 22, that the 50 percent tariff on steel and aluminium will only apply from a certain quota. Nevertheless, the tariffs may put pressure on the export to the United States of steel and, for example, machinery. The export to Germany of car parts, for example, is also likely to be under pressure. Chip machines and pharmaceuticals are exempt for the time being, but it is possible that President Donald Trump will come up with separate tariffs for these sectors. However, it has been agreed with the European Union that these rates will not exceed 15 percent.

The uncertain geopolitical situation and import tariffs are likely to weigh on investment. Nevertheless, the Nevi Purchasing Managers' Index indicates growth in activity. Employment is also increasing at a decent pace, which has not happened since the end of 2022.

ASML saves costs

Activity may grow thanks to growth in the chip market, although some of ASML's suppliers beg to differ. Some suppliers say they are struggling with a considerable drop in orders from the chip machine manufacturer from Veldhoven. The demand for older machines in particular is disappointing, according to one of ASML's suppliers. Presumably, ASML's latest machines benefit more from the growing demand for advanced chips for use in data centres for AI applications. Older chip machines are used, for example, to produce chips for the automotive industry, which is suffering from trade tensions. The market could improve in the fourth quarter or next year, according to a purchasing manager. On the other hand, it is also not inconceivable that the demand for older machines is not too bad, but that ASML is limiting its own stocks in order to increase profitability. In the past, it has happened more often that suppliers complained about declining orders, and afterwards it turned out that ASML had delivered more machines to customers.

Suppliers may also be affected by ASML's ambitious cost reduction targets in the coming years. Many suppliers are redesigning parts of ASML machines in order to be able to produce them at a significantly lower cost. Attempts are also being made to design the chip machines in a more modular way, so that parts of existing machines can easily be replaced.

Defence industry grows under the radar

Overcapacity has arisen at a number of companies, which is at least partly filled by investments in production capacity for the defence industry. These are mostly empty factory halls in which new production lines are set up. For example, VDL is building lines for defence in the old Nedcar factory in Born. Some high-tech companies are also investing. The machinery industry and service providers involved in installation, among others, can benefit from this. The defence industry is therefore growing under the radar.

In the short term, the recovery of the manufacturing industry remains uncertain. President Trump's import tariffs are depressing European exports, including in the chemical industry. In addition, the chemical industry, for example, is suffering from increasing competition from China, which has a harder time selling products on the American market. The uncertain geopolitical situation may also put pressure on investments. On the other hand, government investment in defence and infrastructure could boost industry in the coming years.