Germany’s foundry industry continues to be in crisis and is not expected to recover until the end of 2021. Despite a slight positive order development, expectations for 2020 remain at a very low level and staff reduction is becoming increasingly topical. These are central findings from the fifth survey by the Federal Association of German Foundry Industry (BDG). Since March 2020 (first survey), BDG has consulted its member companies monthly during the coronavirus crisis, thus collecting data on the German foundry industry frequently and systematically. The basic frame of equal questions is supplemented on a case-by-case basis. The latest (fifth) survey consisted of eight questions posed after the summer break.
With regards the topics that were asked from the outset: ‘Do you feel current effects of coronavirus on the operation?‘ During the first interview in March, 76 per cent of the companies interviewed had felt this. This figure had risen above 96 per cent (April) to 99 per cent (May), fell to 92 per cent in June and reached the April value of 96 per cent with the current survey. The serious matter of ‘order losses’ contines to be of concern, which are once again at a very high level with 92 per cent reference (pre-surveys: just a little 90 per cent). In the further differentiation, a small majority of these companies is suffering ‘serious’ order losses (46 per cent), while losses are ‘significant’ by 40 per cent.
A change is seen in the ‘recent trends in new orders’ compared to previous interviews – in a positive way: among the replies ‘decreasing’, ‘constant’ and ‘increasing’ new orders, the latter category is clearly at the front in the September survey. ‘Mechanical engineering’ (55 per cent) and ‘other industries’ (53 per cent) have the highest values; relatively the most weakest is the positive trend in the ‘automotive’ with 45 per cent. The positive assessment also outweighs the prospect of the expected new orders in the next three months – also with the slightest expectation from ‘automotive’. This is an alarming sign, since the automotive industry is by far the most important customer for the foundry sector.
From the point of view of German foundries, the subject of capacity adjustments has also become an increasing topic from 87 per cent of the companies interviewed, which represents a new highest level. In June the figure was 85 per cent, and in May it was 81 per cent. The answers to the specific instruments have shifted. The ‘short-time’ work fell slightly (76 per cent), reaching 77 per cent in May and 81 per cent in June. However, the level of ‘staff reduction’ increased from 29 per cent (May) to 34 per cent (June) to 39 per cent. “This development can best be addressed by an effective policy to increase sales in the automotive sector,” says Max Schumacher, head of the BDG.
Since March, BDG has also regularly asked whether there are signals from customers to modify supply chains (return to Europe/Germany). In the current survey, this represented a minority of only 25 per cent, which is within the range of the pre-surveys. Clearly, the broad media discussion on confidence in delivery and CO2 footprint – both clearly speaks for more regionally oriented sourcing – is not in line with the actual situation in supply chains. Germany’s foundries expect a longer period of crisis – a relative majority of 45 per cent of the companies interviewed expect it to take more than one year to return to normal utilisation, and another 38 per cent expect the crisis to last for six to twelve months.
Consequently, the estimate of production and turnover for the current year of 2020 is pessimistic, with 86 to 88 per cent of respondents expecting more than ten per cent reduction of production quantities and turnover.
The interviews were conducted from 28th August to 4th September 2020 (calendar week 36), 80 German foundries took part.