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Supplier industry struggles with rising costs

According to ArGeZ, suppliers recorded a 13 per cent increase in turnover. However, the dynamic global situation continues to weigh on the industry. 

In the first quarter of 2022, suppliers recorded an increase in turnover of 13 per cent. This was announced by the German Supplier Industry Working Group (ArGeZ) at a press conference at the Hannover Messe. However, the increase was due to higher input material costs. Overall, the industry continues to struggle with the effects of the coronavirus pandemic and the Russian war of aggression in Ukraine. 

Suppliers started 2022 with an increase in turnover of 13 per cent in the first quarter to EUR 63 billion. This Growth is based solely on higher input material costs and is not reflected in better operating results. The 13 per cent increase in producer prices in this comparative period also proves this. Against the backdrop of global supply chain problems Capacity utilisation and production down on the same quarter of the previous year. Suppliers are aware of their responsibility and have kept employment stable despite the decline in capacity utilisation.

The rise in costs is putting many suppliers under pressure. The price of primary materials is still at historic highs. For example, the prices for many steels - after the price of flat steel, for example, shot to a new record high in March and has cooled down somewhat - remain high and in some cases are still double those of the previous year at their peak. The same applies to non-ferrous metals and petrochemical polymers in the rubber and plastics industries, which are also suffering from limited availability. suffers.

Suppliers in a sandwich position

Suppliers are also struggling with high energy costs. Electricity and gas are the most important energy sources for industrial heating processes. The market price for electricity (excluding government levies and taxes) tripled year-on-year following the outbreak of the Russian war of aggression in March 2022. The price of gas has also tripled. The Government measures to cushion these price rises are not providing any noticeable relief at the momentMany suppliers cannot expect any relief from the government's package of measures either.

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It is obvious that suppliers are suffering in their sandwich position. The powerful OEMs are recording high profits despite lower production figures. This also applies to many basic material manufacturers, e.g. in the steel and chemicals sectors. However, the medium-sized suppliers in between are not in a position to simply pass on the increased costs. In this situation, the major customers must be able to offer a fair Moving burden sharing and dealing with shared challenges in a more collaborative way. 

Maintain competences

The pandemic, the shortage of semiconductors and the Russia-Ukraine war have shown that the Value chains are vulnerable and must be made resilient to global crises. The current price rally on the commodity markets is largely a consequence of Europe's dependence on Russia and China. It is important, Maintaining and not losing competences in Germany and Europe. This can be achieved through diversification and better production opportunities in Europe. The entire value chain, starting with the basic materials industry, must be located in Europe. We need to think and act in networks and alliances.

The energy-intensive industry at the beginning of every industrial value chain must also find internationally competitive framework conditions in Europe and produce here. This also applies to the processing industries and high technologies. Risky Dependencies on other regions of the world should be identified through monitoring. and avoided or reduced as far as possible in the medium and long term.

Source: Working Group Supplier Industry

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