Plunging demand

This year's Hanover Fair has attracted only marginally fewer exhibitors than in recent years, featuring some 6,150 displays from 61 countries.

The exposition, in the capital of the northern German state of Lower Saxony, has long been one of the world's most important showcases for the machine tool trade - a cornerstone of Germany's exports. The global economic crisis is an issue that is impossible to escape at this year's fair.

German President Horst Koehler opened the event on Sunday, criticizing a perceived lurch towards protectionism in some countries. The former head of the International Monetary Fund demanded a "clear-cut timetable" to conclude the current stalled round of talks to encourage free trade around the world.

He also called on industry to embrace the challenge of the current economic crisis, by contributing to an "ecological transformation of the global economy."

Energy efficiency

Energy efficiency is the key message of this year's fair. The German Engineering Federation (VDMA) says environmental technologies will play a major role in turning manufacturing-based economies around. According to the VDMA, last year such technologies accounted for 32 billion euros ($41 billion) worth of goods in the German economy and this year many businesses are hoping to extend that trend, despite a recession.

For example, the makers of "RatNic," a small robot designed to perform inspection tasks on vertical and inclined cables, pipes and wires.

According to its designers, from the Friedrich Schiller University of Jena, RatNic uses 70 percent less energy than conventional climbing robots by mimicking the techniques of a rat.

Motors are one of the greatest sources of potential efficiency gains - an estimated two-thirds of industrial electricity-use is tied up with motors of some sort, from pumps, to ventilators to ship's engines.

One device on display generates electricity through the vibration of its surroundings, a useful way of powering microprocessors.

Targeting manufacturers that rely on outdated engines, industrial giant Siemens told Deutsche Welle that upgrading capital should not necessarily be put off for a sunny day.

"We want to show that innovation and things like saving energy offer the best opportunities to spur growth," said Juergen Brandes, who is the head of drive technology at Siemens. "We also want to put Siemens out there as an innovation leader."

Plunge in orders

Despite the upbeat attitude, visitors to Hanover's trade fair are facing some pretty grim facts.

Orders for German machine tools have plunged by nearly half since last year. Many of their customers, manufacturers in Europe and further abroad, are watching their sales dry up and are in no mood for investment.

Last Thursday, the European Statistics office, Eurostat, revealed that factories in the countries that use the euro currency slashed production by 18.4 percent in the 12 months leading up to February.

Much of the eurozone's unprecedented slump was tied to falling sales for durable goods such as cars, despite a German government incentive scheme for the auto industry, which has seen automotive sales jump in Europe's largest economy.

"Of course we are feeling the effects of the financial crisis," says Roland Bent, head of development at Phoenix Contact.

A leading electronic technology manufacturer, Phoenix Contact is one of the big exhibitors at Hanover this year. "We are reacting by cutting the hours of our employees. Our highest priority is protecting the core of our workforce," Bent said.

Some 100,000 workers across the industry in Germany have had their hours reduced. But the industry also thinks it can see the beginnings of a recovery taking shape. VDMA head Hannes Heese says he expects the current plunge in orders to drop off by next month, as stimulus measures around the world signal a future demand for production.

Author: Henrik Boehme / Nathan Witkop

Editor: Chuck Penfold