The industrial sectors as a whole continue on the path of recovery, but the 'black swans' that 2022 has brought will call it into question. Because Russia's invasion of Ukraine has entered the game, further complicating the problems that the industry was already suffering last year with the energy and supply crises. So much so, that companies have already revised their forecasts for this year. «The current scenario has changed in a matter of days in a very important way. Until the end of February, the perspectives of industrial companies were that this 2022 should be a great year, but the war in Ukraine and the increase in energy prices, together with an upturn in logistical problems, are causing a sudden change in trend”, they report from the Association of Internationalized Spanish Industrial Companies, Amec, which presented this Friday the annual report Situation 2021 and Perspectives 2022, in which it measures the health of the sector. A barometer that had been closed in February, but given the war situation had to be rethought again to the companies consulted.
They already estimate that the wound will be deep. Four out of ten companies have already revised down their business volume and their results for 2022. On average, they place their expectations 12% below the initial ones. Only three out of ten say they will maintain their initial forecasts. By 2022, companies had planned to increase their exports by 12.7% compared to 2021, forecasts that exceeded the forecast made the previous year by 6 percentage points, and that after the invasion of Ukraine lowered by 0.5%, until 12.2%.
But the greatest concern about the war comes from the energy side. Companies have skyrocketed the costs of energy and materials and components, as indicated by seven out of ten companies. Similarly, six out of ten consider that their results will also be affected by the slowdown in the European economy, while half believe that the conflict will have an impact on delivery times.
The general director of Amec, Joan Tristany, explains that the effects are currently multiple and «they can go beyond what one might think», since the value chain has been affected in some cases. «For example, we have a company with a stopped production line because it has a supplier in Italy who has informed it that it will not be able to deliver the products it needs for manufacturing for another 3 months, because in this case its supplier is located in Ukraine. Therefore, the Spanish industrial company cannot continue with its production until its Italian supplier does not have an alternative supplier».
And as an addition, a carrier strike that is putting the entire country in check. Although in the case of the companies that Amec represents, most of them technology manufacturers, “they don't have the same problem as the factories of perishable products. In our case, production and deliveries take place over a long period of time."
In any case, the industry smiles after seeing the light after 2020, with factories in quarantine and exports at half gas due to the harsh health restrictions of the pandemic. Although Amec highlights that among its companies they had hardly experienced any fall during the start of Covid-19, "so the results are especially remarkable," says Tristany.
Thus, companies have increased their export propensity to 56.3% of total turnover, compared to 53.0% in 2020, despite logistical and raw material supply problems. Something that they have achieved "by opting for the diversification of suppliers, distribution chains and markets, with which good results have been achieved despite operating in a very complicated environment."
What has not subtracted from the effects of the supply crisis have led more than half of the industrial companies to a decrease in their margins, an increase in delivery times and an increase in preventive stocks. "As measures, companies already make a longer-term forecast of logistics and purchasing aspects," they highlight. The consequences have led to four out of ten companies already passing on price increases to their customers, while 6% of companies have made specific production stoppages at some point. Although only one in ten ensures that it has lost competitiveness in some markets.
There has also been a change of trading cards in the key markets for the sector. France, the US and Portugal have been the first destination markets in 2021, but Germany falls two positions in the ranking, falling from second to fourth place. The industry regrets the situation with Russia, which in recent years had emerged as a destination with great potential for internationalized industrial companies. “It had been ranked no more and no less than fifth in the ranking of markets that arouse the most interest to direct commercial efforts in 2021 and was ranked eighth in February 2022, before the invasion of Ukraine.”
Also noteworthy is the dismal prospects for exports to the United Kingdom, after Brexit. The British country is no longer among the ten reference destinations for the exports of the companies surveyed.