Industrial production: delivery bottlenecks slow down German mechanical engineering – WELT

business Industrial production

“Stuck at almost every corner” – delivery bottlenecks slow down German mechanical engineering

Industrial robot in modern factory Industrial robot in modern factory

This colleague would work 24/7, but material bottlenecks also slow him down

Source: Getty Images / Westend61

There are plenty of orders in sectors such as mechanical engineering or the electrical industry. However, many companies cannot implement the orders. The VDMA has therefore had to lower its annual forecast. And improvement does not seem to be in sight. On the contrary.

EThere is hardly an industry in Germany that does not complain about material bottlenecks and delivery problems. Mechanical engineering is also currently being slowed down – so much that the Association of German Mechanical and Plant Engineering (VDMA) must now significantly lower its annual forecast for 2021. Instead of the ten percent predicted so far, production will only increase by seven percent to 219 billion euros.

There is plenty of work to do here. In any case, the order books are well filled: from January to October, orders increased by 34 percent in real terms compared to the previous year, which was, however, also characterized by corona. And, according to VDMA President Karl Haeusgen, there are practically no cancellations.

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We could have produced more if the various delivery bottlenecks hadn’t been so persistent, ”says the entrepreneur, referring to a quick poll by his association in December. According to this, 37 percent of the companies surveyed reported “serious” and a further 47 percent “noticeable” bottlenecks. What is missing are primarily intermediate products such as electronic components and metal products, but also plastics, rubber and chemicals.

And improvement does not seem to be in sight. On the contrary: 38 percent of the 500 or more companies surveyed are even anticipating further increasing disruptions in the coming months, and another 57 percent expect the situation to remain tense. The situation will defuse in individual areas at the earliest in the second or even third quarter of 2022.

Two thirds of the companies want to hire more

Accordingly, the VDMA remains cautious. The association is increasing its forecast for 2022, but only from five to seven percent – despite an extraordinarily high order backlog.

Nevertheless, the production volume from the pre-Corona period would be exceeded. Haeusgen does not want to describe the pandemic low with a drop in production of almost twelve percent in 2020 as a crisis for mechanical engineering. Instead, he speaks of a dent. Because mechanical engineering is doing better than many other industries. “We got through this time comparatively well,” said the entrepreneur from Munich.

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The companies were therefore largely able to keep their employees. 1.01 million employees at the end of 2021 mean a decrease of only 1.9 percent in the workforce. The bottom line is that mechanical engineering remains the largest industrial employer in Germany, according to its own statement.

And in the medium term, the number of employees should even grow again: According to a recent VDMA survey, two out of three companies in the industry are planning to increase their own core workforce. 70 percent of companies are already suffering from a shortage of skilled workers. Haeusgen is nevertheless confident and mentions the solution on the one hand, additional training positions and, on the other hand, more qualified immigration to Germany.

Source: WORLD infographic

That meanwhile state aid like that Short-time allowance Haeusgen does not contest that have helped to largely consolidate the current workforce. Nevertheless, the entrepreneur now sees the time has come to turn these and other programs back again. “The effects of entrainment and habituation must be avoided,” explains Haeusgen.

The fourth wave is troubling many companies

In some places they have long since been recognized, just like abuse. In addition, entrepreneurial action and decision-making will be undermined. “The state should therefore be sovereign enough to withdraw again.” Also with a view to state finances, as Haeusgen believes. “The basic prerequisite for further combating the crisis are solid national budgets with financial leeway.”

How quickly aid programs will be dismantled remains to be seen. Because the fourth wave of the Corona crisis is causing a number of industries apart from mechanical engineering to create severe problems. In addition, there are material bottlenecks and delivery problems in other areas of the economy, for example in the electrical industry.

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“The companies could produce significantly more if the serious supply bottlenecks did not press,” says Wolfgang Weber, the chairman of the board of the Association of the Electrical and Digital Industry (ZVEI). “It sticks at almost every corner.”

The companies even estimate that this year’s sales could have been up to ten percent higher without the shortages and logistics problems. As in mechanical engineering, production lags significantly behind developments in incoming orders. Because while the orders in the first three quarters were more than a quarter above the previous year, production is expected to increase by eight percent.

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Industrial production: delivery bottlenecks slow down German mechanical engineering – WELT

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