Large-scale Plant Engineering - Status Report - vdma.org

AGAB Lagebericht Header 2025

WG Large-scale Plant Engineering - Status Report 2024/2025

Large-scale Plant Engineering - Key to global transformation

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AGAB Lagebericht Geschäftsentwicklung 2025

Against the backdrop of geopolitical tensions and increasing trade conflicts, the VDMA Large-scale Plant Engineering successfully held its own in the market in 2024. At 25.0 billion euros, the order intake recorded by the members of the VDMA Large-scale Plant Engineering (AGAB) in Germany and Austria was nominally 1.4 per cent above the previous year's level (2023: 24.7 billion euros). This is the highest order value since the record year of 2008 (32.8 billion euros). This growth was triggered by numerous large-scale and mega projects, most of which were ordered by customers from the energy sector and the metallurgical and chemical industries.

In addition to the use of innovative technologies in the planning and execution of projects, the companies' strategic focus on new markets and sustainable products and solutions contributed to this increase. The service business also plays an important role, as it not only contributes to long-term customer loyalty, but also represents a stable source of revenue and sustainably strengthens the overall result.

After a record year: orders from Germany normalize

In 2024, orders from Germany reached 6.0 billion euros. In relation to the record result of the previous year (2023: 9.6 billion euros), this corresponds to a decline of 38 per cent. If the average order intake of the past decade is used as a benchmark (2015 to 2024: 4.6 billion euros) - a sensible approach in the volatile business with large-scale systems, which adjusts for project-related fluctuations - this results in growth of 31 per cent. This shows that the business in Germany remains on a solid footing. Market activities in the past year focused primarily on the sustainable restructuring of the energy system and energy-intensive industries. Accordingly, the focus was on systems for CO2-free energy generation and steel production as well as systems for the transmission and distribution of energy. These sectors stood for around 85 per cent of orders from Germany in 2024, including several mega orders with a volume of over 500 million euros. One of these flagship projects is the construction of a direct reduction plant and a steelwork in Dillingen, with which the customer intends to replace the existing blast furnace route and reduce CO2 emissions by 4.8 million tons per year within six years. Another project is the construction of a new converter system for the grid connection of an offshore wind farm in the North Sea. The contract was awarded to a member of AGAB, which is responsible for all engineering services, the procurement of components and the construction, transport and installation of the systems. Growth was also recorded in chemical plant engineering in 2024: Orders rose by 44 per cent to 363 million euros (2023: 253 million euros). Particularly noteworthy are several major projects in the gas generation segment, including a 100-megawatt plant for renewable hydrogen, which is being built at the Wesseling Chemical Park. In other sectors, such as plant construction for the wood, paper and cement industries, no major projects were realized in Germany in 2024.

Demand from abroad continues to grow

At 19.0 billion euros, incoming orders from abroad in 2024 were 26 per cent higher than in the previous year (2023: 15.1 billion euros). The recovery in the export business has thus continued impressively: Since the low point in 2020 (8.7 billion euros), foreign orders have increased by 121 per cent - despite the collapse of the Russian market and geopolitical turmoil. VDMA large-scale plant engineers were particularly successful in industrialized countries last year, especially in Western Europe and North America. There was also strong growth in the Middle East and in some African countries. In contrast, demand from Southeast and East Asia, particularly China, fell to a long-term low. The export ratio was 76 per cent in the reporting period (2023: 61 per cent).

Industrialized countries were the most important buyers of large-scale plants

Industrialized countries accounted for around 41 per cent of foreign orders in 2024 - this group includes the countries of Western Europe and North America as well as Australia, New Zealand, Japan and South Africa. Orders there rose by 3 per cent to 7.9 billion euros (2023: 7.7 billion euros). In relation to the long-term average (2015 to 2024: 4.9 billion euros), the increase was as high as 60 per cent. This development underlines the importance of industrialized countries as a sales market for VDMA large-scale plant engineering. In no other group of countries do topics such as decarbonization and sustainability as well as the restructuring of energy systems play such a significant role - which opens considerable opportunities for further growth and technological innovation in plant engineering. As in the previous year, the US were the most important sales market for AGAB members worldwide in 2024. Orders reached a value of 1.8 billion euros (2024: 2.4 billion euros). Demand was mainly for systems for energy generation and transmission, such as for the grid connection of large offshore wind farms. There were also further orders in chemical plant engineering and metallurgy. In Canada, VDMA large-scale plant engineering achieved a record order volume of 1.1 billion euros (2023: 68 million euros). This was triggered by a mega order to supply a world-scale plant for clean hydrogen and atmospheric gases in Alberta. Once completed in 2028, this complex will be one of the largest of its kind and will supply industrial customers who want to produce climate-neutrally with sustainable hydrogen. The most important countries in Western Europe in terms of order intake were Sweden (1.3 billion euros), the UK (717 million euros) and the Netherlands (620 million euros). While the focus in Sweden was on the expansion of climate-neutral steel production, demand in the other countries was primarily for energy supply and energy transmission systems. There were also other major projects in chemical plant engineering that are contributing to the decarbonization of industry in Europe. One example is the construction of an electrolyzer with a capacity of 200 megawatts in the Netherlands, which is to be powered by renewable electricity from offshore wind farms.

Jump in orders in the Near and Middle East

Demand for large-scale systems in the Middle East rose by 147 per cent to 3.6 billion euros in the reporting period (2023: 1.5 billion euros). The last time there were more orders was in 2011 (4.0 billion euros). The main reasons for this upturn are ambitious diversification projects (e.g. Saudi Arabia's Vision 2030) and the sharp rise in energy demand in the region. Geopolitical factors and the targeted promotion of new industries (e.g. steel and aluminum industry) also played a role. With orders totaling 1.8 billion euros (2023: 436 million euros), Saudi Arabia was the most important customer country in the Middle East in 2024. Major orders for the construction of two modern gas-fired power plants, which are to be equipped with systems for capturing and storing CO2, played a significant role. These project marks an important milestone on Saudi Arabia's path to climate neutrality. Increases in orders were also reported from the United Arab Emirates (683 million euros) and Iraq (654 million euros). The focus here was on the delivery of complete power plants and energy distribution systems. This means that the Middle East is once again playing an increasingly important role as a sales market for large-scale plant engineering, with strategic investments in energy, infrastructure and sustainable technologies continuing to support demand. A survey of AGAB members shows that the Middle East offers good prospects for further growth in large-scale plant engineering in the current year (as of April 2025).

Significant decline in Asian business

Orders from the Asia-Pacific region - defined by AGAB as China, Hong Kong, North and South Korea, Mongolia, Taiwan and the ASEAN states - fell by 19 per cent to 1.5 billion euros in 2023 (2023: 1.8 billion euros). This is the third decline in a row and the lowest order value in this region since the mid-1980s. The main reason for the slowdown in Asian business is the decline in demand from China, which fell by 18 per cent to 649 million euros in the reporting period (2023: 791 million euros). The main reasons for this are overcapacities in key customer sectors such as the steel and cement industries, strong Chinese competition and a ‘Buy Chinese’ policy that increasingly penalizes foreign suppliers. Nevertheless, there was also positive momentum in 2024 from orders for the conversion of industrial plants and the expansion of electromobility. Systems for lightweight materials and battery separator films as well as for the manufacture and recycling of batteries were particularly in demand in China. In Southeast Asia, incoming orders fell by 25 per cent to 450 million euros (2023: 600 million euros). The most important market in the ASEAN region was Malaysia with 261 million euros, followed by Thailand (70 million euros) and Indonesia (50 million euros). In East Asia, AGAB members once again suffered a decline in orders due to a lack of major orders, for example in South Korea (216 million euros) and Taiwan (90 million euros).

Fewer orders from Eastern Europe and the CIS

In the reporting period, incoming orders from Eastern Europe and the CIS - i.e. the Eastern European EU member states and the countries of the Balkans and the former Soviet Union - totaled 1.0 billion euros. This corresponds to a decline of 39 per cent compared to the previous year (2023: 1.7 billion euros) and a drop of 59 per cent compared to the average of the past decade (2015 to 2024: 2.5 billion euros). One reason for this decline was the subdued demand from the Eastern European EU states. Poland proved to be the most important buyer of large-scale systems with a volume of 119 million euros (2023: 704 million euros). The fact that the slump was not even more pronounced was due to several major orders - primarily from Uzbekistan, which was the most important sales market in the CIS in 2024 with an order volume of 761 million euros (2023: 234 million euros). One key project involves the delivery of technologies, equipment and services for the construction of a copper smelter. This is to be integrated into an existing industrial plant and will produce 300,000 tons of copper cathodes and 1.8 million tons of sulfur acid per year. Secondly, the EU's economic sanctions against Russia and Belarus have brought the supply of large-scale plants to a complete standstill. Furthermore, demand for industrial plants from Ukraine has been severely impaired by the war. Once the conflict is over, however, billions in investment will be needed to rebuild the country's largely destroyed industry. The VDMA Large-scale Plant Engineering could play a key role in this, as AGAB members have long maintained close economic relations with Ukrainian customers and have already realized numerous large-scale projects there in the past.

Rest of the world: Market success in emerging markets

The "Rest of the world" refers to all countries that are not assigned to any of the four groups mentioned before. These include Africa (excluding South Africa), South and Central America, South Asia with India, Turkey and Oceania. Incoming orders in this group of countries reached a volume of 5.1 billion euros in 2024 - more than twice as much as in the previous year (2023: 2.5 billion euros). A key driver was the high level of orders from Africa - a market that has not previously been a focus of VDMA Large-scale Plant Engineering. In 2024, incoming orders from Africa totaled 2.4 billion euros (2023: 820 million euros). Several large and mega projects were commissioned in Angola (877 million euros), Libya (745 million euros) and Mozambique (177 million euros). One outstanding project involved equipping a large hydropower plant in Angola with turbines, generators, control technology and auxiliary systems. The scope of delivery also included a specially developed training concept for the operating personnel as well as customized financing. This project marks an important step towards a more stable energy supply for the Southwest African country. AGAB members also recorded high order intake from India (501 million euros), Brazil (340 million euros) and Turkey (207 million euros). In these markets, the focus was primarily on investments in the modernization of the steel industry and energy supply. These positive developments emphasize the competitiveness of VDMA Large-scale Plant Engineering in developing and emerging countries - a strength that is based not only on high-quality engineering, but also on offers for the qualification of personnel, for project financing and other consulting services.

AGAB Lagebericht Auftragseingang Grafiken 2025

Incoming orders provide important information on the current situation in large-scale plant engineering. They provide insights into country-specific and regional trends and serve as an indicator for future economic developments. The market figures presented here are based on primary surveys of the members of the Large Industrial Plant Manufacturers' Association and provide reliable information on the actual business development of the industry. To view the charts, please click on the headline.

AGAB Lagebericht Umsatz Grafiken 2025

Turnover in large-scale plant construction is developing continuously. One reason for this is the payment methods. Customers often transfer their installments in line with the construction progress of a plant, which leads to a constant flow of income. On the other hand, the expansion of the service business is stabilizing the inflow of funds. Nevertheless, turnover in large-scale plant construction is less suitable as an indicator for assessing market development, as it reflects past orders due to the long-term nature of the projects. To view the charts, please click on the headline.

AGAB Lagebericht Umfeld 2025

Global economic environment

The International Monetary Fund (IMF) is forecasting real global Gross domestic product growth of 3.3 per cent in both 2025 and 2026 (2024: 3.2 per cent). These figures are below the long-term average of 3.8 per cent (2000 to 2019) and indicate subdued economic momentum.

Ongoing geopolitical tensions, in particular the war in Ukraine, and the protectionist course of the new US administration are weighing on the global economy and increasing general uncertainty. In addition, many countries are facing structural challenges such as demographic change, technological upheaval, cyber risks and - particularly in the EU - a high level of regulation, which is hampering economic activity. Rising energy and commodity prices are also fueling inflation.

In most emerging and developing countries, the conditions for economic growth are more favorable. Gross domestic product is expected to grow by 4.2 per cent in 2025, with India (6.5 per cent) and China (4.6 per cent) likely to record the highest rates. These countries are benefiting from a young population, rising investment in infrastructure and digitalization and increasing industrialization.

Among the developed economies, the USA is expected to grow by 2.7 per cent in 2025, the highest figure in this group. This is primarily due to robust domestic demand and the investment-friendly US tax system. In contrast, economic momentum in the eurozone is significantly weaker at 1.0 per cent. Germany, the largest economy in the eurozone, is lagging behind with expected growth of just 0.3 per cent. The country has been suffering from weak growth since 2020, characterized by falling industrial production, declining investment and rising unemployment. It remains to be seen whether the new German government can bring about a turnaround through a bold change in economic policy. The VDMA's ideas for strengthening competitiveness in Europe can be found here, the suggestions for a #locationupgrade in Germany here.

Energy and climate policy framework conditions

VDMA Large-scale Plant Engineering (AGAB) has to hold its own in this challenging economic environment. Nevertheless, the industry is looking to the future with confidence, as its innovative technologies are making a decisive contribution to solving global challenges. Plant engineering even has a key role to play in the transition to a low-carbon economy. Almost all AGAB-companies offer sophisticated technical solutions for the decarbonization of industrial processes and sustainable energy generation, making them important pioneers for “net zero”. Examples include plants for green and blue hydrogen, CO2-free steel and cement plants, electrified steam crackers and technologies for CO2 capture and storage (CCS).

However, the transition to a low greenhouse gas economy and society is progressing much more slowly than predicted. The main reasons for this are political uncertainties, a lack of market incentives, high investment costs for industrial transformation and challenges in introducing new technologies and implementing them on an industrial scale for the first time. As a result, growth in plant engineering in the green tech sector is currently lagging behind original expectations. One of the few exceptions is equipment for CO2-free steel production, which is experiencing high demand, particularly in Europe, due to extensive funding programs from the EU and national governments. In the medium and long term, however, business models are also needed here that do not require permanent subsidization.

To remain successful in this environment, VDMA Large-scale Plant Engineering is calling for reliable and stable long-term political framework conditions for all companies, technological neutrality and trust in market forces and entrepreneurship instead of market-distorting interventions. This is the only way to mobilize private capital, make the necessary investments and successfully shape the transition to a sustainable economy.

Easing on the market for skilled labor

The situation on the market for skilled labor eased further last year. In Germany and Austria, the general economic weakness and de-investment, particularly in the automotive industry and energy-intensive sectors, are the main reasons for this. As these sectors are preparing for a permanent decline in demand, it can be assumed that the issue of a shortage of skilled labor in plant engineering could become less acute. However, the need for personnel in the construction segment remains high, especially for orders in the EU and the US, many of which are in a late project phase. At the same time, digital technologies and artificial intelligence (AI) are becoming increasingly important in plant engineering. Many companies are therefore faced with the challenge of building up the relevant expertise - whether through internal training and personnel development or by recruiting specialized experts on the market.

Falling demand for turnkey projects

The turnkey construction of complete plants, one of the core competences of many engineering companies, is currently seeing less demand on the market. Many customers now prefer to divide projects into smaller parts to optimize costs and better manage risks. This means that services that are not part of the engineering company´s core business are outsourced to specialized providers. On the one hand, this leads to a reduction in business volume for traditional EPC companies (EPC = Engineering, Procurement, Construction) and, on the other, to an increase in interfaces at the customer´s side, which requires sophisticated risk management. At the same time, the complete service of an EPC package is increasingly rarely rewarded appropriately, as the focus of clients is shifting more towards flexibility and cost control.

New technologies increase productivity in plant engineering

Technologies such as AI, virtual reality (VR) and augmented reality (AR) are becoming increasingly important in plant engineering. In the past year, the fields of application of AI have expanded considerably - in addition to the programming of plants, AI it is now being used in areas such as procurement and legal operations as well as in construction management and occupational safety. This trend is also clearly reflected in the main topics of many VDMA events, which focus intensively on the potential of AI in the planning and execution of projects. The current development of new technologies is being driven largely by young, specialized companies known as start-ups. However, major progress has not (yet) been made. A key obstacle to practical implementation is often inefficient data management: inconsistent or poor-quality data significantly limits the possibilities of powerful AI models. Nevertheless, the field is developing rapidly, and 2024 has shown how dynamic progress could be. With better data strategies and clear management guidelines, significant breakthroughs could soon follow.

Immersive technologies such as VR, AR and extended reality (XR) are also being used more frequently in plant engineering, particularly in engineering, virtual inspections and safety training as well as in construction management. Their main benefits lie in the reduction of errors, the avoidance of rework and the acceleration of processes, which improves the efficiency of project execution and helps to reduce costs. For example, AR-glasses enable technicians to carry out maintenance work more efficiently with real-time overlays of instructions. VR-supported training puts specialists in realistic hazardous situations. This training takes place in protected, risk-free spaces, which means that the knowledge gained can improve safety on construction sites. With the rapid advances in digitalization, the importance of cyber security is also growing. Both plant engineers and operators are increasingly confronted with challenges in this area. The networking of systems, the use of AI-supported processes and the use of VR technologies are increasing the attack surface for cyber threats. Robust security concepts and continuous adaptation to new threat scenarios are therefore essential to protect sensitive data and the control systems of large-scale plants.

Modularization and standardization offer further starting points for greater productivity

Another lever frequently used in plant engineering to reduce costs and increase productivity is the modularization of plant components, technology modules and complete assemblies. This involves more than simply relocating work from construction sites to safer locations. Changing quantity structures and new ideas in work organization also contribute significantly to the success of efficient modularization concepts. Although there are limits to these endeavors due to the individual nature of the business, large-scale plant engineering has already achieved success here in the past and will continue to exploit potential in the future. According to a VDMA study, consistent modularization can reduce project lead times by up to 15 percent - while at the same time significantly increasing the reliability of schedules. Furthermore, by applying intelligent modularization concepts, large-scale plant engineering has managed to significantly reduce the number of construction site accidents as well as quality and error costs and reduce the impact of economic activities on local communities.

In addition to modularization, the standardization of parts can also be a lever for increasing productivity in plant engineering. Components (e.g. valves, pumps) or complete systems, such as pipe bridges, reactors or columns, are standardized in different size classes and installed in the plant. This not only reduces the time-consuming planning of these systems for each new order, but also shortens delivery times and reduces costs through economies of scale. However, the success of the efforts to increase productivity in large-scale plant engineering described here is being jeopardized by ever tighter government regulation: Increasing reporting obligations in many areas of the company are tying up scarce human resources, which plant engineers lack for their actual business activities, value creation and innovation. This is increasingly proving to be an obstacle to efficient project management. Limiting these requirements (‘regulatory moratorium’) and increasing the digitalization of public administration could make it easier to fulfil some obligations and offer enormous time and financial savings potential for companies.

Expansion of the service business

Plant engineers are vigorously pursuing the development of new business areas and customer groups. Product-related services, often referred to as service, have now developed into an important pillar of large-scale plant engineering. Of particular interest is not only the earnings strength of this business, but also the stabilization of cyclical incoming payments from plant engineering. Service activities also serve as an entry ticket to future projects and as a stimulus for research and development. In 2024, services accounted for 15 per cent of total turnover in VDMA plant engineering. In the coming years, many member companies plan to further expand this business area.

Partnerships can be the key to success in plant engineering

Many large-scale plant engineering projects are becoming increasingly complex and technically demanding. This is partly due to the fact that plant engineering is specifically focusing on new business areas and the market in some areas, such as green hydrogen or electricity-based fuels, is demanding that previous plant sizes be scaled up to a significantly higher level. To meet the changing market requirements, for example for pilot projects in new business areas or in terms of size, in many cases cooperation with specialized partners who can contribute specific know-how, is an option. At the same time, however, it is important to always strike a balance between the benefits of cooperation and the potential additional dependencies. The careful selection of partners and their management are therefore crucial to achieving the desired results and ensuring the competitiveness and independence of companies in the long term.

Outlook: Opportunities outweigh challenges in large-scale plant engineering

Large-scale plant engineering is looking to a promising future that offers many opportunities but also presents challenges. As a key player in the global energy and mobility transition the industry is making a decisive contribution to the decarbonization of industrial processes with innovative solutions. New performance-oriented business models, digital technologies such as AI, VR and AR as well as flexible forms of work (‘new work’) also enable plant engineers to significantly increase their productivity and realize growth potential - also by tapping into new geographical and industrial markets. At the same time, geopolitical and trade tensions, a high level of regulation and growing cyber risks need to be managed. Strong opportunity and risk management and continuous adaptation to new framework conditions are essential for this. Nevertheless, the plant engineering industry remains optimistic: with innovative strength, sustainability and efficiency, and in close cooperation with strong partners, it will continue to contribute to solving global challenges and expand its competitiveness.

AGAB Lagebericht Politische Positionen 2025

The project business of VDMA Large-scale Plant Engineering has always depended on a reliable political framework. In view of the dynamics of current geopolitics and trade policy, VDMA Large-scale Plant Engineering supports the goal of focussing on expanding competitiveness both nationally and within the EU, including with the Clean Industrial Deal. The ‘omnibus’ to postpone and ease obligations within the framework of the EU taxonomy, CSRD, CSDDD and CBAM is a first step in the right direction. However, if we want to deepen the EU internal market, many bureaucratic hurdles that have grown over the years must also be significantly reduced, such as the completely inconsistent reporting obligations for intra-European labour assignments.

However, policymakers should also utilise the opportunities offered by export financing instruments in conjunction with state export credit guarantees. This instrument can be used to provide financing for projects in emerging and developing countries in particular. These countries should also benefit from transformation projects, despite the great need for financing in Europe. For large-scale plant engineering, it is about the possibility of being involved in such projects in various constellations. The basis for this is being able to offer competitive services. Against this backdrop, the large-scale plant engineering sector welcomes the modernisation of the OECD Arrangement on Export Credit Guarantees and the latest package of measures in Germany to strengthen Euler Hermes cover is also on the right track. However, practical implementation is only slowly getting underway and other export credit agencies, such as those in Denmark, Switzerland and Austria, continue to offer their exporting companies far more flexibility. Progress is urgently needed in linking development co-operation funds and export credit insurance.

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