Investment spending manufacturing industry up in 2017

02/12/2016 15:00
Next year, manufacturers expect to invest about 13 percent more in - for example - non-residential buildings and machinery which will be operational the same year. Statistics Netherlands (CBS) reports that the chemical industry anticipates the highest investment increase for 2017 relative to 2016. In the paper industry prospects are less positive.

Dutch manufacturing industry also expects investment spending in tangible fixed assets which became operational in 2016 to be 4 percent higher at the end of 2016 than in 2015 when total investments made by Dutch manufacturing industry exceeded 8 billion euros.

Producers in the chemical industry anticipate investments in assets for direct use to rise by 65 percent, but the rise follows an expected downswing by 25 percent in 2016. In the paper industry it is the other way round: after an anticipated increase by 85 percent in 2016, investments are likely to fall by 29 percent in 2017, the most substantial decline across the entire sector manufacturing industry.

In general, investments are likely to increase in 2017, if they decreased last year and vice versa, but the increase expected for 2017 will nearly always be higher than the anticipated decline for 2016.

 

Purposes

In manufacturing industry, 43 percent of investments in 2016 are earmarked for replacement of existing fixed assets. Another 33 percent is earmarked for expansion purposes. Investment spending in efficiency improvement is rather low .
The picture for 2017 does not differ much from earlier years. The main differences are found in the paper and chemical industry. The paper industry expects 50 percent of investments to be used for expansion in 2016, and in 2017 47 percent will be earmarked for replacement. About 60 percent of investment spending in the chemical industry is used for replacement purposes in 2016, whereas in 2017 expansion and efficiency will become more important issues.

Overall picture

In November CBS already found that the mood in the private sector is largely positive. This is also reflected in manufacturing industry. The drawback, however, is that the balance of optimistic versus pessimistic producers is lower (7.3 percent) in 2017 than in 2016 (12 percent).
Yet, investment spending is anticipated to rise, because the chemical industry intends to invest considerably in various large-scale projects in 2017. The chemical industry is relatively small, but has ample financial resources available due to the presence of a number of large multinational companies.