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.
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. âOverall, 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, âsaid Ralph Wiechers, VDMA chief economist.
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.
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.
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. âMore 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 â, 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.