Status: 08/30/2022 1:58 p.m
German industry still lacks important primary products. The situation in August eased somewhat, according to figures from the ifo Institute. But what about the bottlenecks?
By Antonia Mannweiler, tagesschau.de
German industry continues to suffer from material bottlenecks – in August, however, the situation eased slightly compared to the previous month. In July, around 73 percent of companies stated that they were suffering from bottlenecks in the primary products. This month it was only 62 percent. The ifo Institute announced the results of the survey today.
The biggest declines in August were in the leather and furniture industries, down 40 and 29 percent, respectively. But there was also a slight relaxation in the mechanical engineering sector, which is important for the German economy. While almost 90.7 percent of companies were still complaining about delivery bottlenecks in July, the figure was 85.7 percent in July.
Despite the slight recovery, there is still a lack of necessary primary products in many sectors. More than two thirds of the companies surveyed in the automotive industry suffer from a lack of materials, but there is also still a lack of preliminary products in beverage production or electrical equipment.
A sign of relaxation?
The level of material shortages is therefore still high, says Klaus Wohlrabe from the ifo Institute tagesschau.de. You have to wait for the next month to see whether the relaxation is really confirmed.
The reasons for the scarcity of materials are manifold. In a survey conducted by the DIHK in August last year, the main reasons for this were the increased demand and the insufficient production capacities, which were responsible for almost 70 percent of the delivery bottlenecks and price increases. More than half of the companies also cited problems with transport and production downtime at suppliers as triggers.
Delays in delivery due to lack of containers
The lack of containers and freight capacity on ships caused problems for many companies when transporting materials, especially during the peak phase of the corona pandemic. If the logistics get out of step, it takes a while for them to get back on track, says Wohlrabe. The closed ports in China as a result of the strict zero-Covid policy had led to delivery delays worldwide. There is currently less sand in the gears there, says Wohlrabe. Nevertheless, it is no longer the oiled machine it was before the pandemic.
In an interview with “Welt am Sonntag”, the head of the Hamburg shipping company Hapag-Lloyd, Rolf Habben Jansen, also reported that there were clear signs of a normalization of the tense supply chains. “Six months ago each of our ships was three or four times overbooked, now the ships are maybe 20 percent overbooked. That’s a key indicator,” he said.
Location at the chip market
In many industries, the important semiconductors that are used, for example, for the production of cars or smartphones are still missing. However, the mood here is not clear. The head of the German semiconductor manufacturer Infineon, Jochen Hanebeck, recently told the “Süddeutsche Zeitung” that the bottlenecks in the semiconductors that are purchased from contract manufacturers will continue into the coming year.
Peter Fuss, responsible for the automotive industry at auditing firm EY, sees a slow improvement in the supply of semiconductors. One of the reasons for this is that the supplier market is being reorganized. The demand for semiconductors from the IT industry is currently declining, which means that car manufacturers are getting more chips again. You can also feel the reduced demand for electric cars, which require more chips than combustion engines. This also has to do with the expiration of bonuses. That reorganizes the market and puts the chip crisis into perspective.
Trend reversal not discernible
From the point of view of Melanie Vogelbach, Head of International Economic Policy at the Association of German Chambers of Industry and Commerce, there are no signs of a trend reversal in supply bottlenecks, despite some positive signals. Massive problems in logistics such as difficulties with German inland shipping continued to burden the supply chains.
Due to the low water levels, ships on the Rhine would only be loaded to a third – so you currently need three ships for the same amount of containers. This then affects sectors that are heavily dependent on inland shipping, such as the chemical industry. But container ships are also damming up in the North Sea because they can’t be loaded and unloaded so quickly, Vogelbach said tagesschau.de.
What’s next?
In addition, the war in Ukraine is affecting the supply of raw materials to many companies in Germany and around the world. Russia is one of the major suppliers of raw materials for nickel and palladium, which are important for many industrial plants but are also required for chip production. The further course of the corona pandemic in autumn and winter also remains a risk for logistics.
The material bottlenecks and the supply chain problems cannot be solved in the short term, says Wohlrabe. Companies are currently making their supply chains broader and more resilient – at least where possible. Before the Corona crisis, the logistics worked perfectly. They paid particular attention to the price and relied on Asian suppliers, but now production is being shifted back a bit.