German Electrical Industry: Full Order Books Meet Supply Bottlenecks

by | 10. May 2022 - 15:37 | Economy

Despite supply bottlenecks for raw materials and components, the German electrical and digital industry ends the first quarter of the year with a plus.

The German electrical and digital industry recorded a 14.6 percent increase in new orders in the first quarter of 2022, compared with the same period of the previous year. There was also a 13.9 percent increase in March – the first full reporting month influenced by the Russia-Ukraine war. This was reported by the German Electrical and Digital Manufacturers’ Association (ZVEI). Total sales in the industry also increased, by 9.7 percent to 52.5 billion euros.

According to the ZVEI, this contrasts with a rather pessimistic assessment of the current and future situation. General business expectations slumped in March after the start of the war and fell into negative terrain for the first time since June 2020. Prior to that, the business climate had risen three times in a row.

All-Time High for Order Backlog – But Material Is Becoming Increasingly Scarce

The order backlog – which indicates how long the current order backlog will last into the future – reached an all-time high, rising from 4.8 to 5.7 months, said ZVEI chief economist Dr. Andreas Gontermann. Only eight percent of companies are currently short of orders, he said. However, just under half reported a shortage of skilled workers, and 90 percent reported supply bottlenecks. At the beginning of the year, the figure was still 88 percent.

Like almost all sectors, the electrical and digital industry is affected by shortages of raw materials and components and rising prices. According to a recent survey, 60 percent of ZVEI member companies fear additional bottlenecks in the coming weeks, particularly for metals, wood, chemical products and semiconductors. Shortly after the Corona pandemic began, global supply chains were out of step; a development exacerbated by Russia’s war of aggression on Ukraine.

Russia is among the world’s largest suppliers of metals such as nickel and aluminum. Shortly after the outbreak of the war, prices for numerous metals soared. The impact of the war could also prolong the global semiconductor shortage (we reported), as Russia and Ukraine supply key raw materials for chip production.

Photo : iStock/metamorworks

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