Geographical Regions

In its World Economic Outlook report, the International Monetary Fund noted that although global economic growth may have plateaued, it remains on much more solid footing today versus earlier in the decade, and expects global GDP growth to reach 3.7 % in 2019 despite geopolitical tensions, trade disputes and rising interest rates. While Oerlikon is aware of potential risks and headwinds in the global economy, the Group is optimistic that its leading technologies and solutions, global footprint and strong market positions will enable it to continue delivering growth, particularly in its surface solutions business. In 2018, Oerlikon successfully increased business globally and in the countries in which it operates. Oerlikon is currently focusing on strengthening its business in eight countries.

Sales and services sites

162

152 Surface Solutions Segment
10 Manmade Fibers Segment

Production and R&D sites

50

44 Surface Solutions Segment
6 Manmade Fibers Segment

Sites globally

175

44 in the Americas
52 in Asia
79 in Europe

China

Despite weaker credit growth and ongoing trade and tariff tensions with the U.S., China has a high GDP growth rate (2018: 6.6 %) and will remain a global economic heavyweight. As the world’s largest motor vehicle production country since 2009, China is a key growth market for Oerlikon’s automotive and tooling solutions. In 2018, Shanghai Dafangwuyu Automobile Company became the first company in China to buy an Oerlikon Balzers INUBIA I6, a fully integrated and automated coating system that enables high-end metallic coatings on plastic parts. In 2018, Oerlikon Metco won several deals in China to deliver abradable coatings for steam turbines. As China shifts to increase the development of cleaner power generation technologies, its energy market offers attractive business potential. Generating 55 % of the Manmade Fibers Segment’s 2018 revenue, China was the primary contributor to boosting the segment’s orders and sales for filament equipment. Leveraging its technology leadership position, the segment has successfully filled an order pipeline with delivery times extending into 2021. In order to penetrate the hygiene market, the segment is partnering with Shaoyang Textile Machinery in China. Furthermore, the segment has inaugurated an R&D center in Suzhou to advance innovation for texturing machines with the focus on automation, digitalization, energy conservation and process quality improvements. Oerlikon also took steps to establish a foothold in China’s additive manufacturing business, for instance by cooperating with Farsoon Technologies to supply qualified metal-based additive powders.

India

India’s GDP expanded 7.3 % in 2018, supported by its fast-growing manufacturing and services sectors. Against this backdrop, Oerlikon is investing in this growth market. In 2018, Oerlikon Balzers opened in Manesar its largest production facility in the region for tool manufacturers. Oerlikon also successfully set up an in-house coating center in Ahmedabad with GE India to provide abradable coatings for power generation. India is an attractive market for Oerlikon’s manmade fibers business and the segment saw strong demand for production systems for polyester filament, texturing and staple fibers in 2018. Two key players – Filatex, a leader in polypropylene yarn production, and Wellknown Polyesters – intend to further expand their capacities, which will boost the demand for manmade fibers solutions.

Japan

Despite downside economic risks such as a planned consumption tax increase in 2019, growth is expected to remain relatively healthy (2018: 0.9 %) as Japan focuses on export growth, private investment and increased consumption. With one of the largest automotive industries in the world, Japan remains a highly attractive market for Oerlikon’s automotive and tooling solutions. In 2018, the Surface Solutions Segment reported strong demand from automotive customers for its physical vapor deposition coatings and nitriding solutions as well as a higher level of sales and orders in the tooling market in Japan. The newly inaugurated plant in Nagoya is equipped with the latest coating technologies, services and infrastructure for surface coatings of cutting and large forming tools used in car manufacturing. This plant will not only serve the needs of one of the largest Japanese automotive manufacturers as a customer but also cater to the increasing demand from other existing and new automotive customers. Other highlights in 2018 in Japan included Oerlikon Metco developing a proprietary powder specifically for Mitsubishi Hitachi Power Systems for its turbine blades, and its collaboration with Tokyo Metropolitan University to define ceramic coating measurement methods for semiconductor parts and other technologies.

South Korea

South Korea’s GDP expanded 2.8 % in 2018. The country is the world’s sixth-largest motor vehicle production country and its export growth is mainly driven by machinery and transport equipment, providing ample business opportunities for Oerlikon solutions for the automotive, tooling and semiconductor industries. The Surface Solutions Segment further strengthened its business in 2018 in South Korea with a new partnership with ELTC Co., Ltd. for MetcoClad powders for laser cladding applications and is also collaborating with Eutectic Korea for powder development used in hardfacing applications. The segment also entered into a joint venture with CY Myutec – an automotive parts company in South Korea – to further develop this market, particularly for friction systems applications. The long-standing good relationship with the country and commitment to innovation was rewarded when Oerlikon Balzers’ Korean office received the Investors of the Quarter award from the Ministry of Trade, Industry and Energy.

France

France experienced robust economic recovery as private investment and net exports saw strong growth amid an improving business climate. The near-term outlook in the country remains positive as the government undertakes action to rectify structural unemployment and geopolitical risks. In 2018, Oerlikon Balzers obtained Airbus certification for a site in France to supply coatings that meet Airbus’ stringent technical and industrial requirements. This qualified supplier status from Airbus is for copper alloy substrate coatings based on BALINIT C. BALINIT C is applied to aerospace components made of steel, titanium and various alloys to help reduce surface fatigue, withstand wear and high loads, while being lightweight and exhibiting low friction. In addition to aerospace, Oerlikon also sees opportunities from the expected growth of France’s advanced manufacturing market over the next five years.

Germany

Germany has seen sustained economic expansion in recent years and its GDP grew 1.5 % in 2018. Germany’s automotive industry is a major contributor to the German economy and an important market for Oerlikon’s automotive business. A success in 2018 in this market was Oerlikon Metco securing several projects with a leading German car manufacturer for its SUMEBore technology to help improve engines’ performance while reducing emissions. Germany’s large and stable mechanical engineering industry also provides growth opportunities for Oerlikon’s tooling business. A highlight in 2018 was Oerlikon Balzers’ opening of Europe’s largest coating center for tools in Bielefeld to cater to increasing demand. For Oerlikon’s additive manufacturing business, an important partnership was signed with Lufthansa Technik to jointly develop additive manufacturing components for aerospace. Furthermore, the 2nd Munich Technology Conference on Additive Manufacturing provided more than 1 000 decision-makers and leaders from industry, academia and politics ample opportunities for fruitful exchanges. Within the framework of the Bayern Digital masterplan, Oerlikon is establishing a digital hub in Munich to foster further digitalization initiatives. The lab will be developed in a startup-like environment to ensure new ways of thinking, next-generation practice and cross-company collaboration. The Manmade Fibers Segment acquired Germany-based AC-Automation in 2018 to expand its offering of large-scale plant automation solutions for textile and packaging customers. It also took over the technologies from PE Polymer Engineering Plant Construction, Thuringia, to broaden its product range in melt preparation of polymers and to enter the high-end markets for engineering plastics and film packaging.

Russia

In 2018, Russia’s GDP expanded 1.7 %. Russia’s economy has improved competitively, although economic risks such as geopolitical tensions and the possibility of lower oil prices remain a strain on the economy. With approximately 70 % of its GDP tied to oil, Russia offers potential business opportunities in the oil and gas industry. In 2017, Oerlikon signed a research partnership with the Skolkovo Institute of Science and Technology to advance the industrialization of additive manufacturing. This partnership was further developed in 2018.

USA

The U.S. is experiencing robust economic growth, with GDP reaching 2.9 % in 2018. The U.S. aerospace and defense industry is expected to grow 4.1 % annually from 2018 to 2023 and brings new business opportunities for surface solutions and additive manufacturing. In May 2018, Oerlikon and Boeing announced a five-year collaboration agreement to develop standard materials and processes for metal-based additive manufacturing. Oerlikon acquired DiSanto Technology in Shelton, Connecticut, to enter the medical component manufacturing market for its additive manufacturing solutions. In 2018, Oerlikon started operations at its new powder production facility in Plymouth Township, Michigan, to produce high-quality metal powders for surface coatings and additive manufacturing. The oil and gas industry is recovering with the increase in demand and drilling activity.
To offer customers an integrated solution of products, services and application support, Oerlikon Metco is setting up an oil &
gas hub in Houston, Texas. As part of its integrated solutions strategy, Oerlikon Metco has also newly launched its Total Solutions Offering and has scored initial successes, for instance with Caterpillar, a leading U.S. construction equipment manufacturer. The U.S. is also an important market for Oerlikon’s carpet yarn business, which saw very strong growth in 2018.