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Almost one in five factories in the Netherlands has supply problems

The supply problems for Dutch factories are getting bigger and bigger. Production is now faltering at almost one in five factories, partly because materials do not come in.

This is apparent from an ING analysis of figures from the Central Bureau of Statistics. In the most recent survey by the agency, one in three factories currently say they have no barriers to production at all. Before corona, that was almost half.

The main obstacle is now the growing worldwide scarcity of means of production and materials. Of all manufacturers, 18 percent now say that they have production problems due to a lack of this. Earlier this year that was only half, and just before corona it was about 7 percent.

A lack of money or staff is less of a problem than before corona. The demand for products that roll out of the factory here is on average a little less than before corona, but it has already picked up enormously compared to last year.

It is precisely this increasing demand, for chips but also other electronic components, plastics and steel, that has recently caused problems in the chain. Global manufacturing cannot keep up with that demand.

Industry disrupted

This is the result of the corona pandemic, which has disrupted the industry. At first, production fell because factories had to close, or because they expected demand to be low due to the global crisis. The number of transports was also reduced.

Subsequently, the demand for some products appeared to pick up faster than expected. For example, due to the lockdowns, laptops, TVs and telephones were in demand. Meanwhile, car manufacturers are continuing to invest in the development of electric cars, which also require chips.

Because production and transport are ramping up again more slowly than shutting down, major shortages arose. Car manufacturers such as VDL Nedcar in Born had already had to stop production, and Philips, for example, was also able to produce fewer AEDs due to the scarcity.

The global supply shock is also making manufacturers and retailers want to maintain slightly more buffers. Rather, they are often close to the wind, because keeping a stock costs money and is not necessary if the process runs smoothly. Now they want to keep reserves more often, which creates even more demand.

More expensive stuff

Higher prices threaten consumers, who have already had to wait longer for some products. The materials that manufacturers purchase are more expensive due to scarcity, while fuel prices have also risen. They can pass on these higher costs to the retailer, who can settle them at the checkout as long as consumer demand remains high.

Although the chip shortage is expected to last well into 2022, according to some companies even into 2023, there are also bright spots. Edse Dantuma, economist at ING, expects the Dutch factories to run as well on average at the end of this year as before corona.

Almost one in five factories in the Netherlands has supply problems
Source link Almost one in five factories in the Netherlands has supply problems

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