Frankfurt, Germany – The current Covid-19 pandemic has left “deep marks” on the German rubber industry, and a recovery to previous levels is not expected until after 2021, according to the industry association WDK.
The rubber sector posted a 22% decline in sales to €4.5 billion in the first half of 2020, WDK said in a statement 31 Aug.
Total sales of tires stood at €1.7 billion during the first six months of the year, down 28.5% year-on-year, while general rubber goods’ revenues fell 17.8% to €2.7 billion.
For the full year, WDK expects the industry to shrink 17% compared to the €11 billion posted in 2019.
Commenting on the figures, WDK chief economist Michael Berthel attributed the slump to “the disastrous second quarter of 2020.”
“In April and May in particular, the shutdown as a result of the Corona crisis hit the industry with full force,” he said.
According to Berthel, four out of five companies experienced production stoppages and sales fell by 35% in the second quarter.
By around mid-year, he went on to say, almost 60% of companies were still using short-time working schemes to bridge the weak demand.
Automotive suppliers, in particular, were affected by the economic recession.
"[The years] 2018 and 2019 were already difficult years in which the global vehicle market, contrary to expectations, contracted significantly,” the economist said.
In addition to that, he said, other factors such as the move towards electromobility, ongoing international trade disputes and the uncertainties surrounding future cooperation with the UK influenced the market.
In the non-automotive sector, the WDK official noted a ‘different development’ in the first half of the year.
Here, companies were able to record sales growth in the first quarter of 2020.
In the second quarter, however, the Covid crisis affected the business and the cumulative sales fell below the previous year's level by the mid-year mark.
In this sector, employment figures also fell 4.6% to 71,900 by mid-year, due to low capacity utilisation rates.
On a positive note, the WDK economist said sales orders have improved since the April low, but warned that the return to the "previous levels" will not be achieved until after 2021.
“This is a long dry spell for an industry that is only allowed a thin liquidity reserve by its powerful suppliers and customers,” Berthel said.
Therefore, the WDK official called for political measures to be put in place to support the industry.
These, he said, could include the extension of the short-time work schemes as well as the introduction of “new, innovative working time models.”