Facing the pressure of China’s industrial overcapacity and massive exports, the industrial association in Italy urged the European Union on Monday (July 27) to strengthen trade defense measures, fearing that Europe’s position in this strategic industry might further decline. Currently, the EU is studying how to protect European industries from the impact of China’s overcapacity.
The Italian Machine Tool Manufacturers’ Association (UCIMU-SISTEMI PER PRODURRE) advocates for imported machinery to adhere to the same technical and safety standards as European manufacturers to ensure fair competition. They also hope for internal EU discussions on how to address the issue of Chinese machine tool dumping.
Representing about 250 manufacturers of machine tools, robots, automation systems, and components, these enterprises have a combined annual revenue of around 8 billion euros (approximately 9.1 billion dollars) and employ about 30,000 workers.
Stefania Pigozzi, head of UCIMU’s Economic Research Department, told Reuters that Chinese machine tool manufacturers are facing overcapacity and are rapidly expanding overseas. She emphasized the need for a common set of rules applicable to everyone in Europe, as machinery safety standards directly impact production costs, ultimately reflected in the final product prices.
Pigozzi added that even if most Italian companies relocate their production lines to China to compete under equal conditions with local manufacturers, it is not a viable option.
Machine tools are fundamental equipment used in manufacturing key components for automobiles, aerospace, energy, and defense industries, regarded as an important indicator of industrial competitiveness.
Pigozzi noted, “The alarm bells had already sounded last year when China officially surpassed Germany to become the world’s largest exporter of metalworking machine tools.”
According to data compiled by UCIMU, China’s global market share of metalworking machine tool exports increased from 8% in 2016 to 23% in 2025, while Europe’s market share during the same period decreased from 52% to 46%. Italy, as the fourth-largest machine tool exporter globally, saw its market share drop from 8.4% in 2016 to 7.8% in 2025, with exports to China plummeting from 316 million euros to 110 million euros.
The concerns of Italian manufacturers echo the broader discussion within the EU on how to address Chinese dumping. Earlier this year, Italy, along with France, Spain, and two other countries, jointly called for the EU to enhance trade defense tools to safeguard European industries from unfair competition.
The latest data released by UCIMU showed a significant 25.8% decline in Italy’s machine tool order index for the second quarter of 2026 compared to the same period last year, with an index value of 47.8 (2021=100). Overseas orders decreased by 15.3%, with an index of 63.2, while domestic orders fell by 38.7%, with an index of only 33.1.
In response to these results, Riccardo Rosa, President of UCIMU, attributed the decline to global geopolitical tensions, including the Iran conflict, the closure of the Hormuz Strait, and the uncertainty in international trade policies, which have slowed demand from major markets and continued to impact industrial investment willingness.
UCIMU stated in its report that amid challenging circumstances, many Italian manufacturers are diversifying markets, focusing on regions with lower geopolitical risks and expanding into sectors with stable demands such as defense, aerospace, and energy.
However, Rosa believed that the growth in these sectors could not fully compensate for the decline in investment from the automotive industry, which has been one of the largest customers for machine tool manufacturers.
He reiterated the need for the EU to adopt a “technologically neutral” approach towards the automotive industry to maintain supply chain competitiveness, employment, and long-term investments, while assisting manufacturers in industry transformation.
On the domestic market front, many enterprises have postponed investments while awaiting details on the government’s “Hyper-depreciation” incentive scheme. With approximately 7,000 applications totaling 2.5 billion euros, the scheme has been extended by the government until September 2028, expected to gradually stimulate domestic demand recovery.
UCIMU anticipates that the domestic market will gradually recover to peak levels seen in 2021-2022 (exceeding 6 billion euros). The association emphasized that continuous investment in advanced manufacturing technologies, digitalization, and AI will be crucial in maintaining Italy’s manufacturing competitiveness in the global market.
“Hyper-depreciation” is a tax incentive measure by the Italian government. When enterprises purchase eligible assets, the tax-deductible depreciation base can be higher than the actual purchase cost (e.g., increased by 180%), thereby increasing deductible depreciation expenses to reduce corporate tax burdens, effectively lowering investment costs.
(This article is based on reports from Reuters)