Electronics Production | May 03, 2010
Supply bottlenecks threaten economic recovery
Supply bottlenecks within the German industry threaten the economic recovery. However, the volcanic eruption plays only a minor role, states market researcher Roland Berger Consultants.
Supply squeezes in the manufacturing sector are posing an increasing threat to German economic recovery. In recent weeks the delivery situation in many companies has worsened drastically, with the result that normal production processes are becoming increasingly jeopardized. The reasons for this lie both in the relationship between supply and demand and in the delayed interaction between the value chains. At the same time, most companies do not consider the volcanic eruption in Iceland and the disruptions to air traffic caused by this to be an aggravating factor. This is the finding of a quick survey that Roland Berger Strategy Consultants has conducted with procurement managers in the manufacturing industry. "Our survey shows that delivery shortfalls are increasingly becoming a threat to the budding economic recovery in Germany," says Thomas Rinn, Partner in the Operations Strategy Competence Center at Roland Berger Strategy Consultants. "Although our survey is only a snapshot of the status quo and cannot be carried over entirely to the economy as a whole, it does show that while many companies are experiencing a clear increase in demand, the lack of supply of the products they require has worsened dramatically in recent weeks." About two thirds (74%) of the companies already call the situation critical, and on top of this comes the fact that the problem is likely to get worse due to delayed effects in the value chain. "This makes production constraints more and more probable, which in turn will most likely slow the recovery," says Mr Rinn. Reasons for supply bottlenecks Supply problems are particularly common with electronic components, cast and forged parts and with certain primary products, with most of the companies surveyed feeling the effects in several product groups. The experts at Roland Berger have found a number of reasons for the current accumulation of supply bottlenecks: On the supply side of the equation, capacities were cut back during the crisis by shortening working hours, reducing staff numbers or closing factories. "Now, the companies need some time to reactivate these mothballed capacities," says Roland Berger Project Manager Sebastian Durst. "That takes time, especially as many companies are still cautious because they harbor doubts about just how long the recovery will last." On top of that the suppliers are also deliberately curbing supply to raise or at least stabilize their prices. On the other side, demand is increasing strongly: 95% of the companies surveyed are experiencing an upturn in their business and need more raw materials and parts to cater for it. "The fact that many companies didn't expect such a noticeable recovery is making things even more problematic," says Mr Durst. On top of this there is also an issue in that demand varies between products, often considerably. "The reasons for supply bottlenecks differ greatly from product group to product group," says Mr Durst. Volcanic eruption only a minor factor Two further reasons for the shortfall in supply come from the value chain as a whole: All participants reduced their minimum inventory levels and buffer stock during the crisis – some of them too much. And now there is a knee-jerk effect taking place: "Afraid of supply bottlenecks, companies are now ordering or reserving way too much in an attempt to ensure they have adequate supply." That is causing additional scarcity. On the other hand, the eruption of the volcano in Iceland and the chaos in the air freight industry it caused is only having a peripheral influence on the supply chains. Most affected by this are companies in the automotive industry. In contrast, around 70% of the companies don't expect additional lasting adverse effects from the supply problems caused by the volcano. "The volcano erupting in Iceland did bring a problem that had already been there to a peak, and it drew to it the attention of the general public. But the supply chain issues had already existed prior to the ash cloud – and they will continue on in the months to come, well after the cloud has dispersed and nobody is talking about the volcano anymore," says Mr Rinn. Ways to overcome supply bottlenecks, include the building up of capacities in line with demand, realistic ordering behavior and foregoing "artificial" shortages.
Schurter Romania certified to IATF 16949 On 25 November 2019, the Schurter Electronic Components s.r.l. production site in Ilfov, Romania, received the audit certificate according to the automotive standard IATF 16949:2016.
AQ Group appoints new CFO Christina Hegg has been appointed new CFO for AQ Group. She will start her new position in April 2020 and will be a member of Group Management.
Ventec invests in expansion of PTFE laminates manufacturing Ventec International has significantly increased its PTFE laminate manufacturing capabilities following a strategic investment in a new high-temperature press and lay-up/break-down line at its Suzhou (China) manufacturing plant.
Mitsubishi Electric Power Products to sell its Memphis factory Mitsubishi Electric Power Products, Inc. (MEPPI) has entered into an agreement to sell its power transformer factory located in Memphis, Tennessee to Hyosung Heavy Industries, known for the HICO brand in the United States.
Sponsored content by CMLCML putting the drive into e-mobility As the global demand and trend for e-mobility grows, we understand that customers are looking for products with better performance, stricter tolerance, increased reliability and cost effectiveness. This means your PCB provider must understand the challenge you are facing, be able to support you throughout the whole process – from the first technical questions to the end of life.
MRSI moves to new facility MRSI Systems, which was acquired by Mycronic back in 2018, is moving to its new 102,000 square-foot facility in Tewksbury, Massachusetts.
dSPACE adds West Coast office Simulation and validation specialist dSPACE has opened a Silicon Valley office in San Jose, California as part of its strategic realignment.
Cogiscan, BasiCAE form strategic partnership Quebec-based Cogiscan Inc. has announced a partnership with China’s BasiCAE Technology, a provider of traditional shop control systems and software customization services.
Korea hits new record of industrial robots in operation The World Robotics report presented by the International Federation of Robotics (IFR) shows a new record stock of about 300,000 operational industrial robots in the Republic of Korea in 2018 (+10%).
Keytronic starts production at its new Vietnam facility Keytronic Corporation says it has started shipping product from its new Da Nang, Vietnam manufacturing facility.
USI's looking to accelerate expansion - acquires Asteelflash It looks like we’re ending 2019 with a bang. One of the worlds biggest EMS providers wants to acquire one of Europe’s largest electronics manufacturers.
Devon manufacturer adds capabilities in Dorset via acqusition Devon-based PCB manufacturer, EuroTech Group, is acquiring PCB manufacturer Lyncolec, based in Poole, Dorset.
Kyocera and TactoTek collaborate on IMSE solution Kyocera and TactoTek has singed a marketing agreement which aims to bring IMSE solutions to several new market segments, including industrial and automotive components, electronic devices, and more.
IPC: Unanimous approval of USMCA needed IPC issued a statement this week expressing support of the recently bi-partisan approval of the United States-Mexico-Canada Agreement (USMCA), and a strong desire for legislative approval by Canada, Mexico, and the U.S.
Nordson's CFO to retire in 2020 after 30 years with the company Nordson's Executive Vice President and Chief Financial Officer, Gregory A. Thaxton, plans to retire in 2020 after thirty successful years with the company, with the last 12 years as CFO.
KUKA restructures subdivision due to economic uncertainty KUKA is restructuring a subdivision in the Robotics segment that is responsible for automated manufacturing solutions such as cells and special machines.
PCB industry recovers slightly in Q3 PCB manufacturers in the D/A/CH region were able to increase sales sequentially in the third quarter of 2019 by 1.1%. However, sales figures are 11% lower than those recorded for the third quarter of 2018, reports the industry association ZVEI PCB and Electronic Systems.
Garz & Fricke moves into new HQ in Hamburg-Harburg Garz & Fricke GmbH continues to expand. As of late October, the business operations of the HMI and Panel PC specialist will be transferring to the new headquarters in in Hamburg-Harburg.
TF Massif Technologies taps new CEO British Columbia-based TF Massif Technologies has announced the appointment of Tom Peregoodoff as the company’s new chief executive officer.
DoJ: Google, Fitbit deal under review The U.S. Justice Department is looking into anti-trust issues concerning Google's bid to buy Fitbit Inc.
L3Harris Tech secures U.S. Marine Corps order L3Harris Technologies received a USD 50 million follow-on delivery order for Falcon III AN/PRC-160 HF radios and related equipment from the U.S. Marine Corps .
Metair completes Romanian lithium-Ion battery cell factory South African energy storage company, Metair Investments, says that its Romanian units Prime Batteries and Rombat have completed the installation of the group's first Lithium-Ion battery cell manufacturing and assembly facility in Bucharest, Romania.
£5m award marks ‘topping out’ of Cardiff research powerhouse An GBP 80 million Cardiff University powerhouse for Welsh scientific research has been ‘topped out’ by Bouygues UK – backed by over GBP5 million support from Welsh Government and industrial partners.
Advanced Energy expands with new lab near Frankfurt Advanced Energy Industries, Inc. has opened its Advanced Materials Processing (AMP) Showcase Lab near Frankfurt, Germany.
TTM Technologies unveils NY engineering center On the heels of its acquisition of manufacturing and IP assets from i3 Electronics Inc., TTM Technologies has announced the opening of a new engineering center in Binghamton, NY.Load more news