Corona Crisis Survey Positive Outlook for German Foundry Industry
Mutations, lockdown and problems with regard to the procurement and administration of vaccines are dominating the public debates and concerns of the industry. Against this background, the German Foundry Industry Association nevertheless draws an encouraging conclusion from the now eighth member survey regarding the effects of the pandemic.
The German Foundry Industry Association (Bundesverband der Deutschen Gießerei-Industrie - BDG) has been monitoring the situation in the industry since March by conducting regular surveys with a gratifyingly high level of participation. While a basic set of questions has been established in order to be able to analyze decisive developments over time, additional focal points are repeatedly set as the pandemic situation and the general framework conditions change. With regard to the financing requirements of future investments, the January survey included questions on business development in addition to the assessment of the situation, expectations and forecasts.
Although the dynamics of the infection figures and the associated political measures slightly cloud the business outlook for 2021, the assessments of the German foundries also send positive signals in many respects. Compared to the previous survey, the sales slump for 2020 is estimated to be significantly lower. Meanwhile, it is becoming increasingly apparent that the production level of the strong year 2018 will already be reached again around mid-2022. An important indicator of this is that Germany's foundries are aiming for normal capacity utilization in the second half of 2021. Despite the second Corona wave, the ramp-up of production will pick up earlier than previous surveys suggested. BDG General Manager Max Schumacher: "This positive development must not be burdened by government measures. Instead, it must be further supported by the right framework conditions. We need the courage to provide further relief so that the necessary sustainable transformation of the economy can succeed.
The reason for these positive corrections in the assumptions is likely to be the increasingly upward trend in orders. While rising order intake has already been reported recently, German foundries expect this trend to increase in intensity in the coming weeks and months. This is having an impact not least on companies' personnel policies. With only around a quarter of companies now concerned, fewer than at any time since the survey began fear having to make further staff cuts. The extent to which this might become necessary has also decreased significantly. At the same time, one in ten companies is hiring again.
In the course of ramping up production, investments will be made in 2021 that can be compared with those made in 2019. The focus will be on automation and digitization. Energy efficiency in particular will be given high priority in a large proportion of the investments. It is hardly surprising that capacity expansions will only play a minor role. Although the crisis has hit foundries hard at times and investments were significantly scaled back last year, the remarkably low level of liquidity bottlenecks in the industry suggests that the planned investments in 2021 are on a solid footing.
The survey was conducted from January 8 to 13, with 71 German foundries taking part.