The high cost of energy and materials as well as the economic uncertainties due to the war in Ukraine cause great uncertainty in the metal and electrical industry. One in five companies in the industry sees its existence at risk due to the current economic environment, according to the latest business survey of the Gesamtmetall employers’ association, which is available to Deutsche Presse-Agentur.
“Cost increases are hitting companies hard,” said Gesamtmetall CEO Oliver Zander. “These are, of course, the effects of rising energy prices, raw material prices and so on.” According to the report, 80% of the companies surveyed believe that they are “significantly” affected by the high costs.
Nearly a third of businesses also said they had significantly reduced production or would need to do so this year. “This is related to disrupted supply chains and congestion in global ports,” Xander said. The lack of semiconductors, for example, continues to affect production in the automotive industry. There is a shortage of raw materials and raw products.
Zander once again warned against the embargo on Russian gas. In such a case, we should be afraid of huge losses in production. Almost every fourth company expects a complete cessation of production in the event of a gas freeze. “This would affect 300,000 employees in the companies surveyed alone,” Xander said.
Critical infrastructure, for which more than half of the companies surveyed produce, will also be potentially affected. These are medical technology products, as well as products intended for the energy and transport sector or for transport infrastructure. “At some point, production stops will have an impact there as well,” said the union leader.
The necessary investments are not implemented
According to the survey, due to high costs, more than 55% of companies postpone or delay their upcoming investments. “This is difficult because if you skip the investment, production growth is lower later,” Xander said. “All companies are facing structural changes. This requires high investment. If the money for this can no longer be earned, this is a disadvantage for the whole country in the long run.”
Many companies are taking initiatives in the tense economic environment: more than half are trying to expand their own supply chains. To a lesser extent (14%), they also relocate their production back to Germany or other EU countries. One in five companies reported a reduction in staff.
The timing of the publication of the Gesamtmetall survey is not accidental. On Monday, IG Metall wants to publish the demand recommendation for the upcoming round of collective bargaining in the metal and electricity sector in the fall. Trade union leader Jörg Hofmann had already called for a significant increase in wages in preparation for the round due to high inflation.
According to Gesamtmetall, more than 1,400 companies took part in the industry survey between May 16 and 31. They represent about 42% of all employees in the sector.
Source: Capital
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