The members of the Arbeitsgemeinschaft Großanlagenbau (AGAB) registered orders worth €21.0 billion at their European headquarters in 2022 - 0.8 percent less than in the previous year. Despite many challenges, the large-scale plant engineering sector thus successfully mastered the difficult fiscal year 2022 and held its own in the market.
"In addition to the digitalization and automation of many processes flows and the use of innovative technologies on construction sites, the companies' consistent focus on sustainable plants and processes has paid off in particular," said Dr. Hannes Storch, Vice Chairman of AGAB and Managing Director of Outotec GmbH & Co KG.
Domestic and industrialized countries continue high demand
In 2022, domestic orders doubled to €6.6 billion (2021: €3.2 billion), reaching the highest level since 2011. Mega orders for the grid connection of several offshore wind farms in the German North Sea were the triggers for this upswing.
At 14.4 billion euros, international order intake was 20 percent lower than a year earlier (2021: 18.0 billion euros). This decline was almost entirely due to the absence of the Russian market, as foreign orders adjusted for Russian business increased by 23 percent in 2022.
VDMA large-scale plant manufacturers were particularly successful in the industrialized countries last year. Companies there booked orders worth more than €7 billion - the first time since 2008. Customers from Western Europe placed orders for around 60 percent of this volume. Orders in the USA reached a record level of 2.2 billion euros. Member companies also reported growth in the Middle East and in major emerging economies such as Brazil and India.
Decarbonization of industrial processes through large-scale plant engineering
The markets in large-scale plant engineering are in a state of flux more than ever - and not just because of the Ukraine war. The market environment in 2022 was again characterized by pandemic-related catch-up effects and high demand for solutions for the digitalization and decarbonization of industrial processes.
"AGAB members again set standards in this regard, for example in the supply of refineries for synthetic fuels as well as plants for CO2-free power generation. In the construction of climate-neutral steel mills and cement plants as well as the sustainable extraction of non-ferrous metals, VDMA's large-scale plant engineering sector is also one of the global sustainability pioneers," explains Jürgen Nowicki, spokesman for the VDMA's large-scale plant engineering working group.
Bridging technologies for a sustainable economy
2022, plants to produce hydrogen were also delivered. In the future, this is to play a central role in decarbonization as an energy carrier and reducing agent in the steel industry. However, large-scale plants capable of producing green hydrogen on a gigawatt scale are still lacking. Green hydrogen is defined as hydrogen produced with renewable electricity. Until then, greater use of blue hydrogen and blue ammonia, whose CO2 is captured and stored as it is produced (CCS technology: carbon capture and storage), is inevitable.
"The transition from an economic model based predominantly on the use of fossil energies to one based exclusively on the use of regenerative energies can only succeed through a gradual conversion and a mix of green and fossil energy sources with CCS," analyzes Dr. Storch.
Need for legal certainty for mobile working abroad
The pandemic has brought about a profound change in the world of work, which calls for new fiscal framework conditions. The popular solution of mobile working involves the risk of unintentionally establishing taxable permanent establishments abroad when crossing borders. Large-scale plant construction is already characterized by time-intensive construction sites, which lead to a large number of taxable permanent establishments abroad and thus to considerable additional administrative work. Additional taxable permanent establishments should only be created after a certain number of mobile working days abroad have elapsed, in order to avoid further administrative expenses due to unwanted wage tax obligations in other countries - national regulations alone are not sufficient for this.
"VDMA-Großanlagenbau is therefore pushing for an internationally coordinated approach - at least within the European Union, ideally between OECD member states," explains Dr. Storch.
Forecast of rising sales
For 2023, most AGAB members expect constant or even rising sales and are predominantly optimistic with regard to order intake. This confidence is mainly fed by the fact that VDMA's large-scale plant engineering sector can offer its customers innovative technologies for clean energy generation and the decarbonization of industrial processes. In addition to this, the companies are consistently expanding their service business and are actively participating in the development of a circular economy in Europe by building plants for recycling recyclable materials.
"The prospects in large-scale plant engineering are promising; after all, the industrial sector has a key role to play in achieving the 1.5-degree target. This opens up growth prospects. Climate neutrality is the common goal of all AGAB members," says Dr. Storchs.