Tough times for the mechanical engineering industry

Crown crisis Tough times for the mechanical engineering industry

Editor: Nicole Kareta

The mechanical engineering industry is increasingly feeling the effects of the corona pandemic; orders are reduced or even canceled. According to the VDMA flash survey, many companies are making capacity adjustments.

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“Overall, 45% of businesses report notable order losses or cancellations, and 32% of even serious respondents.”

The situation in the mechanical engineering industry worsened further due to the consequences of the corona pandemic. By the end of March, 84% of member companies surveyed by the VDMA were already reporting adverse reactions, and the figure has since risen to 89% (mid-April). In addition, the main problems have shifted more towards demand side disruptions, that is, a decrease in orders or cancellations. “Overall, 45% of companies say notable order losses or cancellations, and 32% of even the most serious respondents. However, supply chains are also still under great pressure, ”said Ralph Wiechers, VDMA chief economist.

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The epicenter of the disruption continues to be in Europe. Over 90% of mechanical engineering companies reported disruptions on the supply and demand side in Europe. On the demand side, there is a strong negative impact from the USA (47%). In China, on the other hand, the situation seems to be stabilizing.

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More than three quarters of companies do not yet see an easing of the disrupted supply chains for the next three months, 28% of companies even expect the situation to deteriorate. Most respondents are even more critical of the development of the order situation – 43% expect the situation to worsen on the demand side. Regarding expected sales, business appreciation has not changed significantly: as in March, around 60% of businesses predict a drop in turnover of between 10 and 30% for the whole of 2020.

In a short time, Covid-19 infections have reached more than 500,000 worldwide.

Capacity reduction in large companies

A total of 790 companies in the mechanical engineering sector participated in the third VDMA flash survey on corona effects. The proportion of companies making capacity adjustments has increased from 75% to 83% in the past three weeks. “More and more companies are sending their employees on short-time work and organizing production stoppages and downsizing – even of parts of the core workforce. Large companies with an annual turnover exceeding 1 billion euros use these instruments for capacity adjustment. more frequently than medium-sized companies ”, explains the chief economist of the VDMA.

If measures to contain the corona pandemic are relaxed for the foreseeable future, a third of companies expect to need 1-3 months and another third expect 3-6 months respectively to return to use. normal capacity. More than 20% of the companies surveyed even allow 6 to 12 months for this stage.

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