Energy prices increase two-, three- or even fourfold for industry. The liquidity of automotive and industrial suppliers is shrinking drastically, red figures are in sight. And what do their customers do at the head of the supply chain? They ignore the situation. Without screws, sheet metal parts, etc., the assembly lines in car, railcar, and wind turbine production will grind to a halt. The rescue is in the hands of the manufacturers themselves.
The salvation is in the hands of the manufacturers themselves: “Our member companies from the supplier industry need fair talks and customers who share in the energy price increases,” demand leading associations. The urgent wake-up call comes from the sheet metal forming (IBU) and solid forming (IMU) industry associations and the German Screws Association (DSV).
“Energy costs must become a topic of negotiation”
Suppliers are currently negotiating with their customers over the more than 50 percent material cost increases. At the same time, the next price shock reaches them in the form of crushing energy costs. “These have not been a topic of negotiation so far, but they urgently need to be,” said IBU Managing Director Bernhard Jacobs. “The increases – by a factor of two to four with potential upside – hopelessly overwhelm beleaguered steel and metal fabricators.”
Without support, suppliers are heading for deep red figures – politicians also challenged
Most suppliers have long since exhausted potential savings, and the abolition of the EEG surcharge has evaporated due to simultaneous increases in electricity prices. “In the short term, their liquidity will be the biggest problem. Without support from the supply chain, suppliers are heading from their tight single-digit EBIT margin to deep red figures,” Jacobs underlines.
Willingness to talk and fairness in the value chain
Willingness to talk and fairness within the value chain are required. Customers in the mostly medium-sized supplier industry are still insisting on existing contracts. And doubt the energy price increases cited by their suppliers. “Different maturities and closing dates are causing different increases, but this will soon be put into perspective. The massive increases will hit all companies – the market dictates that,” explains Hans Führlbeck, Managing Director of the German Bolt Association.
German supply chains at risk: rapid and consistent action called for
The DSV managing director calls for swift, consistent action to keep energy-intensively produced products in Germany. “If suppliers are stuck with the price increases, supply chains will break. And products important for automotive and industrial production will fall out of the market. This can only be prevented if we tackle the crisis fairly and together,” said Führlbeck.
New VDA principles must be followed by action
“The VDA’s new principles for cooperation between automotive manufacturers and their partners must now be followed by action,” adds IMU Managing Director Tobias Hain. “The paper describes everything very nicely. Without implementation, however, it is just a piece of paper.” And politicians also have a role to play: An electricity price cap – financed by special levies on the windfall effects from the gas price-driven merit order system – is necessary and also possible.
