Apr. 21, 2020

VDMA: Corona pandemic hits mechanical engineering hard

Results of a quick poll of the association

  • More and more mechanical engineers are applying for short-time work. (Picture source: Gorodenkoff/shutterstock)More and more mechanical engineers are applying for short-time work. (Picture source: Gorodenkoff/shutterstock)

The mechanical engineering industry is increasingly feeling the effects of order losses and cancellations due to the corona pandemic. According to the VDMA flash survey, many companies are making capacity adjustments. The situation in the mechanical engineering industry has worsened again due to the consequences of the corona pandemic. At the end of March, 84 percent of the member companies surveyed by the VDMA were already reporting adverse effects, and this figure has since risen to 89 percent (mid-April). In addition, the relative shift in problems has continued: towards demand-side disruptions, i.e. order losses or cancellations.

"Overall, 45 percent of the companies report noticeable order losses or cancellations, and 32 percent of those surveyed even serious order losses or cancellations. However, the supply chains are also still under strong pressure," says VDMA Chief Economist Dr. Ralph Wiechers. The epicentre of the disruptions continues to be in Europe. More than 90 percent of the mechanical engineering companies reported supply-side or demand-side disruptions from Europe. On the demand side, there are also high defaults from the USA (47 percent). In China, on the other hand, the situation appears to be stabilizing.

More than three quarters of the companies do not yet see any easing of the disrupted supply chains for the next three months, 28 percent of the companies even expect the situation to worsen. Most of the respondents are even more critical of the development of the order situation - on the demand side, 43 percent expect the situation to worsen. With regard to expected sales, the companies' assessment has not changed significantly: similar to March, around 60 percent of the companies expect sales to decline by between 10 and 30 percent for the year 2020 as a whole.

83 percent of companies surveyed are cutting capacity

A total of 790 companies from the mechanical engineering sector took part in the third VDMA flash survey on the corona consequences. The proportion of companies making capacity adjustments has risen from 75 to 83 percent in the last three weeks. "More and more companies are sending their employees on short-time work and are arranging for production stops and staff reductions - even of parts of the core workforce.

Large companies with annual sales in excess of 1 billion euros are using these instruments for capacity adjustment more frequently than medium-sized companies," explains the VDMA chief economist.

Should the measures to contain the corona pandemic be eased in the foreseeable future, one third of the companies expect to need 1 to 3 months and 3 to 6 months respectively to return to normal capacity utilization. More than 20 percent of the companies surveyed even expect 6 to 12 months for this step.

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