Exporting metal parts for food processing equipment to Europe

Europe is home to a large food processing industry, requiring the necessary food processing equipment. The industry mostly uses processing equipment that is produced in European countries. If you can meet the product quality requirements and price expectations of these producers, there are good opportunities for subcontracting the production of stainless steel food processing equipment parts.

1. Production description

When ‘food processing equipment parts’ or ‘(metal) parts for food processing equipment’ are referred to in this survey, this concerns the following CN codes, unless stated otherwise:

• 843490 - Parts for milking machines and dairy machinery
• 843790 - Parts of machinery used in the milling industry or for the working of cereals or dried leguminous vegetables
• 843590 - Parts for presses, crushers and similar machinery used in the manufacture of wine, cider, fruit juices or similar beverages
• 843890 - Parts of bakery, confectionery, cocoa, chocolate, sugar, brewery machinery

Product specifications

Specifications of metal parts for food processing equipment as required by European buyers are described below.

Material and design

Food processing equipment parts are mostly made of austenitic stainless steel of either 304 or 316 type, or 304L or 314L if welding is required. In addition to these non-hardenable austenitic and ferritic stainless steel types, higher strength ‘duplex’ types (such as grades 1.4362 and 1.4462) can be applied in a ‘warm’ environment (i.e. over 50°C) where stress corrosion cracking (SCC) can be a corrosion risk. Such as in brewery sparge tanks.

The parts should have a hygienic design with high requirements for surface finishing. The buyer specifies these requirements. Also refer to the EHEDG information below.

Labelling and packaging

You should not underestimate the packaging of food processing equipment parts. European buyers do not accept any defects or damage of the parts and the parts’ surface.

Depending on the product characteristics and buyer wishes, stainless steel parts are packed in wood, plastic or in containers. In the case of a heavy product, for example, the outer package is a heavy box with all of the empty space in the box filled to prevent the product from moving. The package for ocean transportation may be wooden pallets wrapped with wooden sheeting. Strengthened with metal strips on the exterior.

In some cases, the packaging and labelling requirements are included in the buyer’s specifications. Last but not least: packaging is always labelled. Not only for the purposes of identification during transport, but also to indicate the quantity, weight, the products themselves and the producer’s name. The packaging should also represent the relevant company’s image.

Quality

Quality standards of individual food processing companies in Europe are very high. But that was not enough; European Union wide standardisation was introduced a few years ago, in the form of EHEDG certification. Every year, more buyers demand EHEDG certification with the equipment they buy. Such as pumps and valves applied in food processing.

In fact, hygienic engineering and design are the foremost aspect in the quality of food processing equipment parts. Therefore EHEDG sets strict guidelines for this aspect. The surfaces of the parts must discourage bacteria growth. So they must be free of defects and damage such as scratches, grooves, porosity, pits, burrs or divots.

EHEDG also means that the surfaces must withstand corrosion from the food being handled and the chemicals used to clean the equipment. In most food applications, a roughness finish of (Ra) value below 0.8 um is considered food grade. However there are some exceptions, such as dairy. Dairy applications should have a finer finish because milk products carry more bacteria and spoil relatively quickly. Note that in Europe the 3-A sanitary standards are also frequently applied. 3-A standards are stricter than EHEDG in many cases.

2. What makes Europe an interesting market for parts for food processing equipment?

Please be aware of the following, before continuing onto the figures:

1. The trade and production figures in the section ‘Trade’ give an indication but do not represent the total value of food processing equipment parts. In reality, figures are at least 2 times as high. This is because many codes for parts are not included in the statistical selection, as these parts are not specifically produced for application in food processing but have many more applications. Examples include parts for pumps, valves and parts of process equipment.
2. Production and demand figures of parts would be even higher if in-house part production was included. European equipment producers partly produce the parts themselves. This type of production is not included in the statistics as this data is not available.

Imports

European imports of food processing equipment parts increased by 4% per year on average between 2011‑2015 to €1.9 billion in 2015. Most of the European imports come from within Europe. In 2015, they amounted to almost €1.6 billion.

The imports from Developing Countries showed higher growth (+11%). In 2015, Developing Countries held 4% share of the total food processing equipment part imports. In the next few years, the import of parts for food processing equipment is expected to show a small growth, in the range of 0-2%.

Germany is the largest importer of food processing equipment parts, followed by France and the United Kingdom. The import from Developing Countries reached almost €12 million in Germany, €9.3 million in France and €7.4 million in the United Kingdom.

The countries with high import from Developing Countries in 2015 are the Netherlands and Denmark (both €14 million). Denmark showed the highest absolute growth (additional import value of €6 million) in four years’ time in imports from Developing Countries.

Leading suppliers

Germany, the Netherlands, Italy, Denmark and France are the top five leading European suppliers. Together, they represented almost 60% of total European imports in 2015.

The United States (6% share) is the largest supplier in the category ‘Rest of the world’. Of all the mentioned countries, the Netherlands (+9.3%) and the United States (+9.2%) showed the highest annual growth between 2011‑2015.

China is the main supplier from the Developing Countries category, followed by Turkey. Together they held a share of 3% in total European imports in 2015. Of these two countries, China showed the highest annual growth in 2011-2015 (+16% per year).

Exports

Total European exports of food processing equipment parts increased by 3% per year on average between 2011‑2015 to €2.6 billion in 2015. Growth was mainly the result of an increase in exports within Europe.

In 2015, European exports to Developing Countries amounted to €642 million, amounting to one quarter of total exports. In the years to come, the European exports of parts for food processing equipment is expected to show a small growth, in the range of 0-2%.

The European exports of food processing equipment parts is mainly destined for other European countries. The Netherlands is the largest European exporter of metal parts for food processing equipment (€649 million in 2015). Other important exporters are Germany, Italy, Denmark, France and the United Kingdom.

In 2015, the export of the Netherlands accounted for 25% of the total European export, whilst Germany and Italy represented 19% and 15%. Italy is the largest European exporter of food processing equipment parts to Developing Countries, followed by the Netherlands. The Netherlands (+€35 million) and Italy (+€34 million) showed the highest absolute growth between 2011-2015.

Production

Note that the production and demand figures presented here, apply to the complete food processing equipment industry and not only to metal parts for food processing equipment.

The European production of food processing equipment in Europe showed a 5% annual growth between 2010‑2014. Thanks to that growth, total European production amounted to almost €13 billion in 2014. Italy is the largest European food processing equipment producer (28%), followed by Germany (24%), France (11%) and the Netherlands (10%). Of these countries, Italy and the Netherlands showed the highest annual growth between 2010-2014.

Demand

In 2010 and 2011, the European food processing equipment market recovered from the difficult year 2009. This resulted in a peak in 2011 of €6.8 billion. In 2012 and 2013 demand was under renewed pressure, resulting in a value of €6.5 billion in 2013.

The year 2014 was a year of recovery: European demand reached €6.9 billion that year. During the period under review, the total European demand was affected strongly by a few weak performing markets, particularly Spain, Germany, Austria and Sweden.

France, Italy, Germany, the United Kingdom, Spain and the Netherlands are the largest markets for food processing equipment. Together they represented 70% of the total market in 2015.

Of these countries, Italy showed the highest annual growth in food processing equipment demand (+7.2%) between 2010‑2014, followed by the United Kingdom (+4.2%) and France (+3.3%). Spain and Germany faced a decline of -4.2% and -2.2% per year respectively.

3. What trends offer opportunities on the European market for parts for food processing equipment?

Convenience trend drives food processing equipment sales

A growing demand for convenience food, such as frozen food and prepared meals is a major driver of food processing equipment sales in Europe. However, mature markets like Germany, France and Italy will likely show smaller growth in demand for food packaging machinery. This is mainly due to high and growing taxes and labour costs in these countries. The highest growth will be recorded in Northern and Central European countries.

Overcapacity in Europe metal working industry

Overcapacity in Europe is continuing to cause problems in the metal working sector. Metal production and processing in Europe were still down by about 15% and in Germany by a good 10% in 2014 compared to 2007, the year when the highest level of production so far was reported. In contrast, since the financial crisis, a comparatively small number of production locations have been closed.

Despite the expected production growth in 2015 and subsequent years in Germany and in the EU overall, overcapacity will continue to have an adverse effect. New capacity will also be created, mainly as a result of investment in restructuring and expansion. There are several reasons for such investments, e.g. in order to meet buyer demand, or as a result of the reversal of energy policy.

There will be a continuing demand for high-quality products. Whose characteristics or formats, including ready-to-use components, offer advantages for buyers and final users. Therefore, the producers of the parts and equipment need continuous Research and Development and maximally use their technological competence.

Technological advances

The introduction of advanced equipment, support systems and new materials has supported food processors in meeting increasingly stricter market requirements.

In addition, with help of the new equipment, food processors can gain a competitive edge. For example by being able to apply environmentally friendly and lightweight packaging materials.

The main driving forces in food processing equipment development are 1) the need to save energy in the production processes, as these are often very energy-intensive. The other one is the further improvement and standardisation of product quality.

These two objectives often go hand in hand with further automation measures. As a result, more and more robots are now also being used in the confectionery and baked goods industries.

The major technology trends within food processing equipment include the following:

• sensor technology
• sustainable packaging
• refrigeration climate control
• non-thermal pasteurisation and sterilisation
• nano and micro technology
• innovative processes for utilisation of by-products
• alternative processes requiring less energy or water
• plant-based meat alternatives

Opportunity for labour-intensive products

In general, the more common the product, the more competition there will be and the lower the margin for the producer. On the other hand, the more sophisticated the product, the higher the labour factor in the landed cost price and the greater the interest of European companies in sourcing in Developing Countries.

This is due to the fact that manufacturers in Developing Countries have a competitive edge in terms of labour compared to European manufacturers. This provides an opportunity in relation to labour-intensive products, as up to 50% of the European manufacturer’s cost price may be made up of labour. See Table 1 for a comparison of cost price elements in Europe and Developing Countries.

Table 1: Price level of cost price elements in Europe and Developing Countries, in €

	Europe	Developing Countries
Labour (per hour)	35-40	0.7-1
CNC machining (per hour)	50-120	5-12
Set of tooling (example)	10,000	1,000-2,000

Source: Lichthart Solutions and Globally Cool (2012-2014)

The difference in labour costs between Europe and Developing Countries is partly offset by higher labour productivity in the countries under review. However, a difference of about 30-40% in cost price is possible in many cases.

Of course, cost price calculations depend on the amount of labour necessary to make a specific part. For example, parts that need a great deal of TIG welding are labour intensive. Therefore the price difference between a European manufacturer and a Developing Country manufacturer of (manually) TIG welded and polished parts can exceed 200%.

Experienced buyers in Europe consider a saving of 30% necessary to cover all costs involved in global sourcing. Think of:

• inspection costs
• transport costs
• costs on maintaining overseas relations including visits
• higher stock levels because of longer delivery times
• import duties
• extra quality assurance costs

4. What requirements should metal parts for food processing equipment comply with to be allowed on the European market?

Requirements can be divided into: (1) legal requirements, which must be met in order to enter the market; (2) non-legal requirements, which most competitors have implemented, and which should be met in order to keep pace with the market.

See our study EU buyer requirements for metal parts for a general overview of requirements, below are the requirements that specifically apply to parts for food processing equipment.

Legal requirements

No specific legal requirements apply to metal parts that are used in food processing equipment. The only relevant rules have been laid down by Commission Regulation (EC) No 2023/2006 on good manufacturing practice (GMP) for groups of materials and articles that are intended to come into contact with food (including metals and alloys).

Packaging and liability

Note that there is also non product specific legislation on packaging and liability that apply to all goods marketed in the European Union.

Duties

Food processing equipment parts from outside Europe can be exported to Europe on a duty-free basis.

Non-legal requirements

Certification according to ISO 9001 is a minimum that European buyers expect when searching for new suppliers. Other certification, such as ISO 14001 (environmental management) and OHSAS 18001 (health and safety), can be beneficial when promoting your company and products to potential buyers.

Buyer’s specification

As soon as a prospect is seriously interested, the main requirements will be related to the parts. The material, dimensions and finishing must meet the buyer’s specifications.

In fact these issues are key in the sample phase. If the buyer accepts the samples and all other conditions are agreed upon, the contract can be signed. After that, the main challenge for the suppliers is to deliver the products according to the agreed specifications, delivery times and volumes.

Suppliers should not underestimate these conditions. When supplying directly to food processing equipment producers in particular, delivery times and delivery reliability are of utmost importance.

Sanitary requirements

Buyers in the food processing equipment industry often have specific sanitary requirements related to the surface of the parts. In practice, these requirements are very buyer and application dependent (does the surface come into contact with the food or not, for example). Also refer to the earlier section on “Quality” for more information.

Material and testing requirements

Furthermore, depending on the type of application (critical or non-critical), the buyer may have material and/or testing requirements. As far as material requirements are concerned, the following generally apply:

• The metal that is used must be covered by an (international) standard and approved with a material certificate.
• In a foundry or forge shop, the material must be melted or forged in such a way that after the casting process, the material meets the material standard, which can be stated in an EN10204 type 3.1 certificate. This type of certificate is internationally accepted.

In addition, the buyer may also have testing requirements to ensure the right quality of the parts. Such as:

1. Non-destructive testing (NDT) surface tests: magnetic testing or MT, penetrant testing or PT
2. Section tests: ultrasonic testing or UT and RT or X-ray testing
3. Hydrostatic and/or air leakage testing
4. Testing of stainless steel grades to guarantee the required grade

5. Through what channels can you get parts for food processing equipment on the European market?

The most common market channels are producers of food processing equipment, followed by sourcing agents and importers.

Europe is home to several interesting players. As each company is unique, with its own buyers, market segments and products, the profile of the potential partner is very important. You are very likely, however, to find a match.

There are a few large companies that operate in many European countries, like Alfa Laval and GEA. In addition, each European country is home to a different set of food processing equipment manufacturers and importers, as these companies usually only operate domestically. Some characteristics of interesting European countries are listed below.

Denmark

Despite Denmark being a relatively small country in terms of industrial output, it is home to a large food‑processing cluster, led by Arla Foods (one of the leading dairy companies in Europe) and Danish Crown (Europe’s largest meat processing company).

The importance of the food processing sector has also been the reason for a relatively strong food processing equipment industry.

France

There are some 160 food processing equipment producers and 300 subcontractors in France who are all potential buyers of stainless steel parts.

The French market is highly competitive and already mature, which can lead to French companies looking for cost reductions. They will, therefore, also consider new suppliers for their parts. And they may also consider suppliers from Developing Countries as they expect products from Developing Countries to offer a cost advantage. But in practice, supplying to French equipment builders is difficult for you, as they prefer to buy in their home country.

Germany

Some of the largest German producers of food processing and packaging machinery are Krones AG and Robert Bosch. A unique characteristic of German food processing equipment manufacturers is their range of highly automated equipment, driven by the competition within the food retail market. The strong competition in the German industry could be a reason for German companies to consider new suppliers for the parts they need.

Italy

Italy is home to numerous small and medium-sized producers, which sometimes form consortia to handle larger projects. The industry is characterised by rapid technological advancements, with almost half of food processing equipment producers investing in research and development.

They focus a lot on environmentally-friendly equipment that can save production time. Energy reduction continues to be the main driver for research and development among producers.

Netherlands

The Dutch food processing equipment industry is large and home to globally renowned food processing equipment producers.

Leading food processing equipment producers include Stork Food Systems (now part of Icelandic Marel), GEA Food Solutions and Meyn Food Processing Technology.

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