Liquidity is vital for survival in the crisis

by Hans Diederichs

In February, incoming orders in the mechanical engineering sector fell short of the previous year's level by 4 percent in real terms. While orders from domestic customers fell by 6 percent, orders from abroad were 3 percent below their prior-year level.

"This is the calm before the storm", says VDMA chief economist Dr. Ralph Wiechers. "The real extent of the consequences of the corona pandemic in the mechanical engineering industry will only become apparent in the order figures for March and the following months".

The VDMA therefore supports the Federal Government's major package of measures and acknowledges the efforts of the financial institutions to rapidly channel the funds provided to small and medium-sized enterprises. "We appeal to all banks to pool their resources even more to provide the industry with liquidity in the crisis. The money must flow quickly to cushion the crisis. It also depends on this that we create a rapid economic upswing after the pandemic for the benefit of the country," emphasizes VDMA Executive Director Thilo Brodtmann. The mechanical engineering industry also expects politicians to set the course accordingly in order to be able to take off with full force after the pandemic. "The fitness program announced by the Minister of Economics, Peter Altmaier, should be presented as soon as possible to provide clarity for the companies", demands Brodtmann.

First signals from China

In February, rising incoming orders from the euro partner countries (plus 5 percent) were still able to partially compensate for the decline in orders from non-euro countries (minus 7 percent). "This decline in orders from non-euro countries is probably a first sign of the outbreak of the corona crisis in China," explained Wiechers. "In the March figures we will clearly see the consequences of the spread of the virus. After all, 84 percent of VDMA members reported serious or noticeable order losses in a survey conducted at the end of March".

In the three-month period from December 2019 to February 2020, a total of 1 percent fewer orders were booked. Orders from Germany remained stable compared with the same period last year, while orders from abroad were down 2 percent. Orders from the euro countries were down 3 percent, while orders from outside the euro zone were down 2 percent.

Source: VDMA                        Photo: Shutterstock

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