Corona pandemic hits mechanical engineering across the board

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Corona weighs heavily in the mechanical engineering sector: order losses and cancellations are becoming increasingly noticeable. The travel restrictions are also causing the companies major problems.

The corona pandemic is now being felt throughout the mechanical engineering industry. Nine out of ten companies see themselves as being affected by the economic consequences of the pandemic, according to the results of the fourth VDMA survey among its member companies. "The demand side is causing increasing concern to the mechanical engineering companies", says VDMA chief economist Dr. Ralph Wiechers. "By mid-April, a good three-quarters of those surveyed had already recorded a noticeable or serious drop in orders or cancellations, and at the beginning of May this figure climbed even further to 85 percent," he explains.

According to the survey, in which 724 companies took part, a look at the supply chains promises some hope: Here a slight easing of tension is apparent. In mid-April almost half of the companies still stated that they had been noticeably or seriously affected on the supply side. In the current survey, the figure is now just under four out of ten companies. "Many mechanical engineering companies report that the difficulties with supplies from China in particular are easing," says Wiechers. It is also encouraging that the assessment of developments over the next three months has brightened somewhat on both the demand and the supply side. In mid-April, the relative majority (43 percent) of companies expected the order situation to worsen. At the beginning of May, only just over 30 per cent of companies expected an increase in demand-side disturbances. Almost half of the companies now expect the situation to remain tense for the next three months.

"By mid-April, a good three-quarters of those surveyed had already recorded a noticeable or serious drop in orders or cancellations, and at the beginning of May this figure had risen even further to 85 percent.

Customers deny access to factory premises
The companies are facing major problems due to travel and residence restrictions. More than 80 percent of the companies surveyed stated that residence permits are not granted or their employees are not allowed access to their customers' premises. In addition, 62 percent of customers delay or refuse acceptance of delivered machines, 43 percent of machine manufacturers report liquidity bottlenecks. Almost one third of the companies also see difficulties in transport and logistics handling or health and hygiene requirements.

Sales expectations in the mechanical engineering sector have hardly changed in the past six weeks. Almost two-thirds of the companies still expect a decline in sales of 10 to 30 percent for 2020. The majority of companies with annual sales of more than EUR 1 billion are even more sceptical: Here, three-quarters of those surveyed expect sales to fall by this amount. "Given the dynamic economic environment, these sales expectations can only be a snapshot. The outlook for our industry is currently changing constantly. The 5 percent drop in production we predicted at the beginning of March for the current year can therefore no longer be maintained," summarized the VDMA chief economist.

 

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