Steel and Metal processing Companies Well-equipped
More than 90 percent of the owners and managing directors of the German steel and metal processing sector think that their companies are well-equipped for the next twelve months, according to the findings of a non-representative study among member firms of the steel and metal processing association WSM (Wirtschaftsverband Stahl- und Metallverarbeitung), Düsseldorf. Although one out of two people surveyed expect that the financial crisis may lead to a general credit crunch in the months to come, only one out of ten companies interviewed say that borrowing terms have worsened or that banks have been trying to renegotiate existing terms. “In the past few years, companies of our industry have achieved a good position and made preparations for tougher times. Therefore, most of them do not consider current developments as a result of the financial crisis but as a normal, cyclical downturn,” Ulrich Galladé comments, President of the WSM association.
He continues that the financial crisis is a crisis of the financial sector. “People’s trust has been betrayed in this field – and not their trust in German industry.” He criticizes the rating of bank products in particular:”If banks and rating agencies had applied to themselves the same standards regarding creditworthiness, certification, security etc., which they apply to their clients’ rating, there would be no financial crisis today. Double standards were applied.”
He adds that small and medium-sized companies are generally in a good position for the coming economic downturn – even without using the state funds currently under discussion. Galladé: “We do not need economic programs and subsidies, we do need relief – which will then encourage innovations and create the basis for the upturn after the downturn.” What the WSM wants is to abolish and not just to reduce inheritance tax. “Dropping the inheritance tax would send a strong signal to SMEs, strengthen trust in politics and create growth:” Or the possible extension of CO2-emission trading to SME’s: “The mere bureaucratic requirements would have a serious impact on many businesses and be out of proportion to the positive effect on the climate,” Galladé says. The same applies to plans about extending the accounting standards IAS/IFRS to medium-sized, unlisted companies. Galladé: “The current crisis makes clear that these accounting standards are far from perfect. So it would be absolutely wrong to simply extend them to unlisted SME’s.”
Galladé calls on the unions to give up demanding an 8 percent increase in tariff wages: “We want to secure jobs. We can only talk about this right now and here, the future is crucial – not the past. A lack of new orders, politically-motivated strains in 2009, like energy costs and the imminent downturn – all this, taken together with the demand for higher wages, does not make sense. Enough is enough.”
He continues that companies in this sector are working to capacity. During the first nine months this year, output grew by another 4.1 percent compared to the same period last year, with sales growing by 4.2 percent correspondingly. And there is still an order backlog.
However, the number of new orders indicates that the above-average growth rate of the past few years won’t be achieved any longer: from January to September, corporate new orders were a mere 0.3 percent above the corresponding period last year. Galladé: “Our level is high, that is why the development regarding new orders is not dramatic. However, there are signs from our industry that the current fourth quarter might weigh upon this year’s good average figures.” The WSM would stick to its projected growth in production of 4 percent in 2008, “but nobody knows exactly, what is going to happen in the weeks to come. So it’s a rather optimistic outlook from a present-day perspective,” Galladé explains. For 2009, the WSM expects output to stagnate at its 2008 level – “if framework conditions are ok.”
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