Supply chain disruptions cloud German machinery outlook

International

BERLIN (AP) — A group representing Germany’s machinery industry said Tuesday it expects a weaker rebound in production this year than previously forecast because of persistent supply chain bottlenecks.

The VDMA group said it now expects production to grow by 7% this year to a value of about 219 billion euros ($247 billion), down from the 10% it predicted in September. Last year, production of machinery — a major German export — dropped by nearly 12%.

VDMA said that new orders significantly outpaced increases in production in the year’s first 10 months.

“We could have produced more had the various delivery bottlenecks not been so persistent,” said the group’s chairman, Karl Haeusgen.

However, companies expect to be able to work through their order backlog next year, so VDMA increased its forecast for 2022 from a 5% increase in production to 7%.

A survey of 521 member companies at the beginning of December found that 84% were still experiencing noticeable or even severe disruption of supply chains, roughly the same proportion as in September. They complained in particular of shortages of electronic components and metal, and expected difficulties with electronic components to persist until the third quarter of 2022.

Business confidence in Germany, Europe’s biggest economy, has been weighed down lately by the stubborn supply chain problems and by a resurgence of coronavirus infections. That appears to be receding somewhat at present, but the new omicron variant remains a concern.

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