Every fifth company at risk
Many metal companies fear for their existence
06/18/2022, 09:24 am
The consequences of the Ukraine war and the pandemic are hitting the metal industry hard. There is a lack of semiconductors, raw materials and preliminary products. Added to this are rising energy costs. The loss of production could soon endanger the critical infrastructure, warns Gesamtmetall boss Oliver Zander.
The high energy and material costs as well as the economic uncertainties caused by the Ukraine war lead to great uncertainty in the metal and electrical industry. According to the current company survey by the employers’ association Gesamtmetall, one in five companies in the industry sees their existence in jeopardy due to the current economic environment.
“The cost increases are hitting companies massively,” said Oliver Zander, General Metal Managing Director. “These are of course the effects of the energy price increases, the material price increases and so on. It eats through.” 80 percent of the companies surveyed see themselves affected “to a substantial extent” by the high costs.
Almost a third of the companies also stated that they had reduced production to a large extent or that they still had to do so in the current year. “That has to do with the disrupted supply chains and the traffic jams in front of the world ports,” said Zander. The shortage of semiconductors is still having an impact on production in the automotive industry. There is a lack of raw materials and preliminary products.
Critical infrastructure at risk
Zander again warned of an embargo on Russian gas. In such a case, massive production losses would have to be feared. Almost every fourth company assumes that there will be a complete standstill of production in the event of a gas stop. “That would affect 300,000 employees in the companies that took part in the survey alone,” said Zander.
The critical infrastructure, for which more than half of the companies surveyed produce, is also potentially affected. It is about medical technology products as well as those for the energy and transport sectors or the transport infrastructure. “At some point, production losses will also have an impact there,” said the head of the association.
Companies postpone investments
According to the survey, more than 55 percent of companies are postponing or postponing upcoming investments due to the high costs. “It’s difficult because if you don’t invest, production growth will be lower later on,” said Zander. “All companies are facing a structural change. This requires high investments. If the money can no longer be earned for this, it will be a disadvantage for the whole country in the long term.”
Many companies are taking the initiative in the tense economic environment: more than half of them are trying to broaden their own supply chains. To a lesser extent (14 percent), they are also relocating production back to Germany or other EU countries. Every fifth company stated that it was shedding staff.
The timing of the release of the total metals survey is no coincidence. On Monday, IG Metall intends to publish its recommendation for the forthcoming collective bargaining round in the metal and electrical industry in autumn. Trade union boss Jörg Hofmann had already called for a sharp wage increase in advance because of the high inflation.