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Coronavirus German Foundry Industry - Short-Time Work and Recession

Editor: Nicole Kareta

Germany's foundries are already considerably restricted in their operations by the coronavirus, are increasingly heading for short-time working and are expecting a recession: this is the result of the member survey carried out by the Federal Association of the German Foundry Industry (BDG) between March 10th and 13th.

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Almost 40 % of the companies surveyed had already introduced short-time working or were planning to do so in the immediate future.
Almost 40 % of the companies surveyed had already introduced short-time working or were planning to do so in the immediate future.
(Source: gemeinfrei / Unsplash)

Update - second Survey

A second survey by the BDG from March 31th to April 3th, 2020 shows that Germany's foundries are increasingly restricted in their operations due to the corona crisis. According to Max Schumacher, General Manager of the BDG, the corona crisis has now affected the foundry industry nationwide. Here you can see a summary of the most important findings:

  • 96 % of German foundries feel the effects on their operations
  • the most serious effects are liquidity bottlenecks, restrictions on business travel, absence of guests or customers, sales difficulties, supplier and vendor defaults, and absences of own employees
  • bottlenecks are clearly concentrated in the area of occupational health and safety and hygiene (masks, disinfectants) and, in the case of raw materials and components, increasingly in Italy and Spain
  • there is still a shortage of alcohol-based foundry auxiliaries in particular. Here, foundries are struggling with poor availability and extremely high prices
  • in the future, sales difficulties are most feared
  • 34 % of the foundries see themselves in a position to quickly find alternatives in case of supply bottlenecks
  • 86 % of the companies surveyed are already in short-time work or plan to do so in the immediate future
  • there are increasing signals that global supply chains are being modified
  • The survey differentiated in nine questions on the current situation at the company and the outlook. For the current situation - calendar week 11 - the companies reported on supply bottlenecks for occupational safety equipment and disinfectants. In particular, a shortage of isopropanol was complained about. In the short term, this may mean that foundries will have to stop production due to a lack of available industrial alcohol, which is currently needed for disinfection. Overall, 59 % of the companies surveyed have already felt the effects of the corona crisis, only 19 % do not.

    Bottlenecks for Raw Materials from Italy

    With regard to the future, the fear is that employees could be absent (70 %) before "sales difficulties" and "supply bottlenecks" (57 % in each case) and "restrictions on business trips" (56 %). Among the bottlenecks, for example, the "supply of raw materials, preliminary products and auxiliary materials from Italy" is specifically mentioned. There are a number of fears regarding the keyword logistics and supply chains. As a result of disruptions, the concrete terms used here are "decline and loss of production", "short-time work" and "redundancies".

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    Financial Assistance From the Government

    Almost 40 % of the companies surveyed had already introduced short-time working or were planning to do so in the immediate future. The measures of the short-time work regulation adopted by the Federal Government are considered sufficient by 47 % - but also insufficient by 31 %. They are calling for concrete liquidity support, for example through loans, and for the extension of short-time work compensation to 24 months.

    "The foundry industry expressly welcomes the measures adopted by the Federal Government. However, in view of the industrial recession that has been going on for more than a year, it is essential to extend the short-time working allowance to 24 months", says BDG Chief Executive Max Schumacher. "The situation in some companies is threatening their existence. The financial aid must also be designed in such a way that the repayment of any loans does not overburden the companies, not to mention further burdens".

    Almost two thirds of the member companies surveyed answered in the affirmative to the question of whether the coronavirus has the potential to trigger a recession. There is unanimous agreement among the German foundries surveyed on this question: no company denied the question.

    In response to the question "Are there signals from your customers that global supply chains are being modified", 62 % of those surveyed answered "no", but on the other hand 15 % already answered "yes", citing "backsourcing of purchasing volumes" and "dual sourcing". These are undoubtedly topics that are intensively focused on, especially in a post-analysis of the Corona crisis.

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