Dutch industry struggles with declining orders and cuts staff

The overall index fell in part due to a further decline in employment, which fell for the tenth month in a row. While at first mainly temporary workers and employees with a temporary contract were sent away, there are now also layoffs, partly due to restructuring.

Slightly more optimistic than in April

Entrepreneurs were slightly more optimistic in May than in April, according to the future output index, which reflects expectations for the next twelve months. A possible explanation is that entrepreneurs are relieved about the provisional trade agreement that the United States (US) and China concluded in Geneva on 12 May.The decrease in the number of new orders is also not too bad, given the great uncertainty. Order books are shrinking, but only slightly. Although the United States has lowered tariffs, American importers still have to pay hefty tariffs, for example 10 percent on most European products, and 25 percent on cars, car parts, steel and aluminium. In addition, there is a possibility that the levies will soon go up again. President Trump has put a pause in talks with the European Union (EU) until July 9. There is also a possibility of a new escalation of trade tensions between the US and China.

Possible assembly in the US

The Dutch machinery industry, among others, exports a relatively large amount to the US. In recent years, for example, about 15 to 20 percent of the machines produced in the Netherlands for the food industry were destined for the US, according to figures from Statistics Netherlands (CBS). In talks with ABN AMRO, several Dutch manufacturers indicate that projects that are already underway are still going ahead, but that the number of new orders is falling. Presumably, buyers are postponing their investment decisions. Some Dutch producers that are already active in the US with a small sales office or distribution centre are also considering assembling there to avoid import duties, although it will not be easy to recruit the necessary technically trained employees.Although world trade has been disrupted, mainly due to trade tensions between the US and China in April, the supply to Dutch industry is still functioning well. Delivery times even decreased in May, according to the Nevi survey. This may be because there is less demand from the US, which means that other markets can be supplied faster.

Trade tensions between the US and Europe could ease after the NATO summit that takes place in The Hague, the Netherlands, at the end of June. European NATO member states are expected to make commitments on additional spending on defence, which may be spent in part on U.S. weapons systems. That would reduce the EU's trade surplus with the U.S. denounced by President Trump.