Supply chain problems deepen for German mechanical engineering companies: survey
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E-mail Xinhua, March 30, 2020
FRANKFURT, March 30 (Xinhua) -- A higher percentage of German mechanical engineering companies said they are being affected by the coronavirus pandemic, a latest survey from the German Mechanical Engineering Industry Association (VDMA) showed on Monday.
The percentage of companies whose operations are affected by the COVID-19 pandemic rose to 84 percent from 60 percent nearly two weeks ago, and 45 percent of those affected said they suffer from "serious" or "noticeable" supply chain disruptions, according to the VDMA's latest survey covering 965 member companies.
Disruptions in supply chains are particularly prevalent in Italy, followed by Germany, China, France and the United States, the survey results showed.
"However, the situation in China and South Korea seems to be easing slightly. In addition, many engineering companies are reporting a significant increase in orders from their Chinese customers," VDMA chief economist Ralph Wiechers said in a statement.
Meanwhile, nearly 96 percent of the companies surveyed are expecting a decline in sales in 2020, and 60 percent of them estimate these declines will be in the range of 10 to 30 percent. Three-quarters of the companies surveyed have already made capacity adjustments, and 12 percent found staff reductions an issue, according to the VDMA.
The industry survey also found nearly three-quarters of the companies are considering cutting back their investment plans for 2020 due to "uncertain business prospects and liquidity bottlenecks".
"Helping to get the investments back on track will be one of the most urgent political tasks for the post-Corona period," said Wiechers.
Germany has been the world's third-largest machinery producer since 2013, with a sales volume of 296 billion euros (326 billion U.S. dollars) in 2019, slightly down from 300 billion euros the previous year.
The past year was already challenging for many mechanical engineering companies, and 2020 will again be "a great challenge for everyone" due to the coronavirus pandemic, Wiechers commented in a recent statement.
The VDMA economists said that there will probably be catch-up effects in the second half of 2020, but they will "by no means" be able to compensate for the losses incurred in the meantime. Enditem
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