Electricity production entities are on the rise
In a recent survey by the Ifo Institute, it was revealed that material shortages have risen significantly in July 2022, affecting various industries across the economy. The increase is not isolated, as other sectors such as machinery and automotive are also experiencing increasing supply problems.
The survey found that 5.8% of companies across all industries currently report supply problems, which is higher than in April (4.1%) but still below the long-term average of 15.0%. In the electronics industry, the scarcity of materials has increased significantly, with 12.7% of companies reporting shortages compared to 5.7% in April.
Klaus Wohlrabe, head of Ifo surveys, attributes the increase in material shortages to Chinese export and trade restrictions on certain rare earths. These restrictions, coupled with ongoing supply-chain disruptions (transport and logistics bottlenecks and constrained global supplier capacity), have persisted since the pandemic and have not normalized by mid-2022. Sector-specific constraints, such as the global semiconductor shortage, have particularly affected electronics and related industries, amplifying material scarcity for those manufacturers.
In the automotive industry, the proportion of affected companies has increased from 0.9 to 7.1%. However, in mechanical engineering, the proportion of companies reporting shortages has decreased slightly, from 4.9 to 4.6%. The production of woodware (excluding furniture) has comparably high material scarcity, with 12.0% of companies reporting shortages.
It is worth noting that the report does not specify which rare earths are subject to the Chinese export and trade restrictions, nor does it indicate whether the material shortages are global or specific to certain regions. Furthermore, the Ifo Institute did not provide any information regarding potential solutions or strategies for addressing the increasing material shortages.
If the trend continues and worsens, other industries such as machinery and automotive could also be affected, according to Klaus Wohlrabe. The previous peak of supply problems in the industry was recorded in December 2021, with 81.9% of companies affected by material shortages. The Ifo Institute published a survey on Wednesday regarding the current situation of material supply in various industries, offering valuable insights into the ongoing challenges faced by manufacturers.
The Ifo Institute's survey reveals that the electronics industry, specifically, has seen a significant increase in material scarcity, with 12.7% of companies reporting shortages, possibly due to Chinese export and trade restrictions on rare earths and ongoing supply-chain disruptions. Additionally, technology sectors such as machinery and automotive could potentially experience similar material shortages if the current trend continues.
