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Study highlights strengths of German machine builders

As Germany's machine tools sector faces stiff competition from abroad, it is turning to innovation and automation to protect its "Made in Germany" brand. A fresh study highlighted the prospects of the industry.

Germany's machine building industry will see its production levels grow by 3 percent by the end of 2014, even as companies grapple with competition from cheap producers such as China or Korea, according to a study presented Monday in Frankfurt.

As those countries flood the market with less expensive goods, mechanical engineers in Europe's largest economy are finding it more difficult to keep the "Made in Germany" brand competitive.

"We can't do cheap," the president of the German Engineering Association (VDMA), Reinhold Festge, told reporters as he unveiled the study, which examined the future prospects of Germany's machine building industry and was compiled with the help of the consultancy firm McKinsey.

Moving abroad an option?

The study found that the majority of German business owners are not interested in moving production facilities abroad to cut costs.

"Only one in five businesses is planning to truly relocate their production abroad," it said.

Instead, manufacturers are focusing on automating or streamlining existing production facilities.

"So if we continue building better-quality and more efficient machines than the competition or occupy a product niche, the future is in our hands," Festge said.

More than 300 businesses took part in the study, its authors said.

cjc/hg (dpa, VDMA)