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Consequences of war: CFOs warn against bloc formation

2022-06-10T13:48:03.290Z


Germany's companies are preparing for far-reaching geopolitical changes. They expect serious consequences for supply chains, production and strategy. The automotive industry in particular is suffering greatly.


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ID.3 production at VW in Zwickau

Photo: RONNY HARTMANN / AFP

Eight out of ten companies believe that bloc formation in international politics will intensify as a result of the Ukraine war.

This was the result of a survey by the management consultancy Deloitte among 143 CFOs.

Accordingly, 70 percent expect a stronger localization of the supply chains.

The corporations see this trend above all in the automotive industry (83 percent) and mechanical engineering (77 percent).

More than half of CFOs fear that trade and international investment could become politically more difficult in the future.

Geopolitical risks would be "a decisive factor for entrepreneurial strategies," says Deloitte chief economist Alexander Börsch.

The non-consideration of such risks could "have very drastic consequences".

In the auto industry, 100 percent of the companies surveyed complain about supply chain problems

According to the survey, three fifths of those surveyed are currently severely or noticeably affected by supply chain problems, which are primarily a result of the corona pandemic and the war in Ukraine.

In the auto industry, 100 percent of the companies surveyed complain about supply chain problems.

According to Deloitte, companies are primarily burdened by higher transport costs and prices for raw materials and preliminary products.

In addition, intermediate products are becoming increasingly late or not available at all.

"The disruption in the supply chains catapults the topic of resilience to the top of the corporate agenda," says Börsch.

The companies are currently reacting primarily by diversifying their suppliers and sales channels.

So far, only slightly more than every tenth company is considering relocating its own production sites.

In the automotive industry, however, around half of the companies surveyed can imagine relocating production facilities.

The majority of companies assume that the bottlenecks will not be resolved until next year.

Around a fifth of those surveyed expect the problems to continue until 2024.

mhs

Source: spiegel

All business articles on 2022-06-10

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