Corona Crisis Hits German Massive Forming With Full Force

2023 Author : Hannah Pearcy | [email protected] . Last modified: 2023-05-24 11:12

The German forging companies are clearly feeling the consequences of the corona crisis: shortfalls in deliveries and slumps in orders force companies to work short-time and require financial help.

The industry association forging (IMU) records the moods and expectations of its members in this special situation in a regular "Corona lunchtime forum" and provides information about relevant developments.

Every two to three days, the members of the IMU exchange information about current developments in a web conference. There has been a strong dynamic since the first meeting on March 20:

• 87.5% of members are affected by travel restrictions
• 50% of quarantine measures
• 44% felt delivery failures or closings of supplier plants
• At this point, 78% of the members had already been affected by order postponements or cancellations or even the closure of customer factories. Since then, this value has increased to 93% .

When asked how long the disruptions in the supply chain were likely to continue, 53% answered by the end of April, 7% by the end of May and 33% by the end of July. 7% of those surveyed even anticipate a longer course.

On virtual paths against the corona crisis

In view of the latest developments relating to the corona virus, events are being canceled or postponed in a row. The future can belong to digital platforms that can compensate for this development. With the "Industrial Generation Network", the Vogel Communications Group presents a solution for professionals in the industry. As a digital supplement, the platform enables extensive networking: the focus is on digital encounters and establishing contacts, as well as product presentation and thematic exchange. Tools such as making appointments and video conferences enable professionals to network, make appointments and do research close to the respective branch. The platform thus replaces the currently severely restricted face-to-face communication, especially at trade fairs.

How can the platform help me?

Impact on planned annual sales

The dramatic impact of these assessments on business development is shown by the question of the expected impact on the planned annual turnover: a quarter of the participating members fear a decrease of up to minus 10%, a third of up to minus 15% and a whole 42% of an even greater slump.

58% plan KfW Corona aid

58% of the support options decided in the federal emergency aid package plan to use KfW Corona aid for investments and operating resources. 25% want to take advantage of the opportunity to pay taxes and 17% social security contributions. The behavior of commercial credit insurers is viewed critically, as they are currently drastically reducing the insurance limits for the industry as a whole and thus additionally negatively influencing the supply chain.

General shutdown of production?

Despite the significant disruptions in the supply chain, 62% of the respondents rejected a general shutdown of production in Germany. 29% considered this useful for a period of 2 weeks to give planning security. Only 9% would like an even longer production stop.

Against the background of the drop in orders, almost all companies in the German forging industry use the tried-and-tested tool of short-time working: 38% of the companies plan up to 25% short-time working, 25% up to 50%, 25% up to 75% and 6% even up to 100%. Only 6% of the companies do not plan to introduce short-time work.

The time after the crisis

Already in the past year, the industry average sales had declined by almost 6%. The last quarter in particular - although not yet influenced by the pandemic - was very disappointing with a minus of 12%. Even if the constraints of supply disruption and supply chain closings are lifted after the Easter holidays, it will take companies years to return to their old strength. After the restart, the loans taken out, deferred lease payments, deferred taxes, deferred rent payments and other more must be paid back and forth.