Corona Crisis - Survey German Foundry Industry Expects Drastic Drop in Sales for 2020
Germany's foundry industry is cutting back on investments and expects drastically falling sales in 2020. Whether the recession will affect employment will probably also depend on the extension of short-time working compensation and the performance of the vehicle manufacturing industry.
Since March 2020 (first survey), the BDG has been surveying its member companies on a monthly basis during the corona crisis, thus exclusively and systematically collecting data on the German foundry industry. The basic framework of the same questions is supplemented according to the situation. The June survey focused on employment, sales development and the evaluation of the economic stimulus package.
On the topics asked from the outset: "Effects of the coronavirus on business operations", 76% of the companies surveyed had felt such effects in the initial survey in March. This figure had risen over 96% (April) to 99% (May) and fell to 92% in June. A serious point remains the lack of orders. As in May, almost 90% of those surveyed answered the question about "loss of orders or cancellations" in the affirmative, 64% of the companies even register "serious" losses (previous month:54%).
From the point of view of German foundries, the issue of "capacity adjustments" has also become slightly more acute. When asked about this, 85% of the companies surveyed said yes (previous month: 81%). "Short-time work" is listed as an instrument (81%, previous month 77%). While "production stops" (33%, previous month 46%) have declined slightly, "staff cuts" could gradually become an issue for entrepreneurs. Here, the approval rate for the question rose from 29% to 34%.
That this aspect is gradually moving into focus is not surprising given the further assessment of the current year 2020. For example, only a minority of 6% of the companies surveyed expect stable to slightly rising sales for the current year, while 93% expect sales to fall, of which 92% expect a decline of more than 10%.
The findings are similar when it comes to the question of investments. Only a minority of 25% intend to stick to the investments planned for 2020 as things stand at present. The overwhelming majority of foundries want to cut back massively. 38% of the foundries surveyed forecast at least a halving of the planned investments.
However, Germany's foundries are not forecasting any change in employment, which corresponds exactly with the pessimistic expectations for sales and production development, even though the signs are pointing to cutbacks. 23% expect employment to remain the same until the end of the year, while 69% of those surveyed forecast a reduction in the workforce, of which 64% expect a decline of more than 10%.
"Here, the regulation on short-time work obviously cushions even more pessimistic scenarios - whereby the question of duration will be decisive for the further development. After all, if just under 90% of our companies consider it necessary to extend the short-time work regulation beyond the current year, this shows quite clearly from our point of view: The industrial SMEs in Germany need incentives for increasing order intake as quickly as possible," says BDG CEO Max Schumacher, summing up the results of the fourth survey, "in particular, the automotive industry must once again bring volume models reliably and successfully to buyers.
It is pleasing to note that despite the severe recession associated with the corona crisis, Germany's foundries intend to continue training young people in the future: An overwhelming majority of 71% of companies want to keep the number of training places they offer constant.