Mechanical engineering feels the disruptions of global supply chains

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The corona pandemic is hitting the mechanical engineering sector more and more severely. According to a VDMA flash survey, almost 60 percent of companies are already affected by disruptions in supply chains. Capacity adjustments are following.

The corona pandemic is having measurable consequences in the mechanical engineering sector, which is characterized by global value-added networks. Almost 60 percent of all companies are already feeling the effects of disrupted supply chains, although the effects are still predominantly classified as "low to medium". This is the result of a VDMA flash survey, which was answered by more than 1000 companies. "The disruptions of supply chains are becoming increasingly noticeable, with Italy and China so far causing the greatest concern," says VDMA chief economist Dr. Ralph Wiechers. These disruptions can only be partially averted by alternative suppliers.

Three-quarters of the companies that have not yet been affected expect disruptions in the next three months. "This makes it all the more important that goods can continue to flow freely within the EU and that commuters, especially service staff, can also cross the borders to work," Wiechers emphasises. With regard to the announcement of production stops in the automotive industry, the VDMA chief economist adds: "As long as the factories are not completely closed, our companies can theoretically continue to deliver the machines and systems or carry out their service. But the more restrictions in our customer industries are announced, the more severely we as equipment suppliers are hit."

Staff reductions are also increasingly becoming an issue in the medium-sized mechanical engineering industry.

The VDMA flash survey also shows that all branches of mechanical engineering are affected by the effects of the pandemic. There is uncertainty in many companies as to whether they will be able to make up the production losses in the months to come. Around 70 percent of the companies surveyed expect sales to fall in 2020. Out of this group, almost half (45 percent) expect sales to fall by more than 10 percent. As a result, a good 40 percent of the mechanical engineering companies surveyed have already made capacity adjustments, mainly via working time accounts, but also using short-time working. "Staff reductions are also increasingly becoming an issue in the medium-sized mechanical engineering industry", warns Wiechers. At the same time, about half of the companies are considering cutting back their investment plans for 2020.

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