Suppliers demand positive signals from politics
9/7/2023 Markets & Industries News

Suppliers demand positive signals from politics

The mood at one of the pillars of the German economy continues to cloud over: In August, the ifo Business Climate for German suppliers fell for the sixth time in a row. With the latest decline of 5.8 balance points, it now stands at only -21.9 points. The working group of the supplier industry (ArGeZ) expects the business situation to remain poor in autumn and calls for "positive signals from politics".

business man at the desk
Both the expectations for the coming six months and the assessments of the current situation are unfavourable. While the former have been in negative territory for some time, the assessment of the current business situation has fallen below the neutrality threshold for the first time since November 2020 (-7.5 points). Only one in five companies still rates the business situation as good. Suppliers who expect an improvement in the next six months are the exception: 7 percent are cautiously optimistic, while just under half see economic difficulties ahead for the industry. 

While the past few years were marked by problems related to the Corona pandemic, supply chains and the war in Ukraine, as well as any catch-up effects, the weakening of Germany as a business location is becoming apparent due to a structural crisis. Where short-term shocks could still be absorbed "by agile entrepreneurship and state support", the ArGeZ now sees the situation as "threatening to the substance". The industrial SME sector often does not have the possibility to avoid poor regulatory competitive conditions.

Substantial reduction in energy prices

The list of fields of action is long. For example, small and medium-sized suppliers mainly use electricity and gas as energy sources. The production and processing of aluminium and steel, foundry products, plastics and textiles consume considerable amounts of energy. The prices for this are far above those of other industrial nations. Automotive suppliers, however, face tough international competition. Manufacturers prefer to outsource parts to companies in regions with lower energy costs. Suppliers who cannot relocate their production abroad therefore needed a substantial reduction in energy prices quickly. 
A time-limited industrial electricity price from 1.1.2024, which also reaches industrial SMEs without hurdles, is urgently needed.
Christian Vietmeyer, ArGeZ spokesman

In addition, the reduction of bureaucracy must progress more quickly, according to the ArGeZ. Their appeal is not only directed at politicians, but also at car manufacturers and large Tier 1 companies. Under the label of sustainability, smaller suppliers are being "inundated" with new declaration and documentation requirements, and within the framework of the Supply Chain Sourcing Obligations Act and social sustainability, medium-sized suppliers are being sent extensive questionnaires. "Small and medium-sized suppliers already suffer enough from state bureaucracy. The car manufacturers don't need to keep adding to it with their excessive questionnaires," Vietmeyer explained.


ArGeZ represents 9,000 mainly medium-sized supplier companies with about one million employees. It is supported, among others, by the Federal Association of the German Foundry Industry (BDG).

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