The metal crisis in the automotive sector – Explica .co
During these weeks, the term semiconductor is one of the most repeated in the automotive industry, and it is not for less, because is featured in a serious manufacturing crisis which even amounts to putting a large part of the staff in ERTE or temporarily suppressing certain elements of more technological equipment. In Diariomotor, we have already done a thorough analysis of the “Chip Crisis”, but the truth is that behind it lies another just as important: metal.
BMW M4 bodywork on the production line
Steel has grown by more than 40% in recent months, along with other metals and alloys
Any modern car needs a significant number of chips, which will depend on its technology and luxury, but which in essence are not an essential component, since it is possible to replace them with other less advanced chips or to resort to solutions such as those adopted by Peugeot for its 308, which has returned to the analog image of a lifetime. however, metals such as steel or aluminum, in addition to other alloys, constitute a fundamental raw material for the manufacture of any car.
So right now we are living a major steel-related crisis that is already affecting small and medium-sized enterprises today in a very remarkable way, and it is only the price of steel has increased by about 40% with regard to prepandemic levels, in addition to extend waiting times to replenish stocks months, whereas before we spoke of weeks or even days.
SMEs supply large factories like Volkswagen in Navarre
For the moment, this situation should not particularly affect large manufacturers with planned and global production and great bargaining power, but we must not lose sight of the large auxiliary auto industry that feeds on these small and medium enterprises, who see how they don’t get the raw material to make the necessary components, and if they can buy it, they are forced to raise their price if they don’t want to “lower the blind.”
It may seem a lesser evil, but to give an order of magnitude, according to the Diario de Navarra, the metallurgical industrial sector of the region is made up of more than 1300 companies with a turnover of 11 billion euros, of which, 80% of them are strongly linked to the automotive industryIt should be remembered that there is the Volkswagen factory where models like the Polo are produced and relatively close, in Zaragoza, that of the Stellantis group.
Sheet metal bending is one of the basic operations of the metallurgical industry
China and COVID as the main causes
There are many factors that caused this metallic bubble to burst, some of them characteristic of the most exhaustive economic analyzes, although they mainly boil down to three: strong demand, duty Yes pandemic stop.
With the industrial shutdown caused by the pandemic, steel companies have considerably reduced their production, both at Spanish, European and global level. Yes indeed, the first economy to reactivate was china, which not only devours a large part of its own production, but also that of other countries.
After the reactivation of the Asian industry, it affects all the others, including the Spaniards, who meet a market in which there is a lot of demand and little supply. Little because a large part of this raw material remains in China, and because the national steelmakers work at half gas with ERTE models and higher prices which allow them to obtain a profitability similar to the previous one (or even higher) .
Rising cost of shipping and high tariffs are not conducive to importing steel from China
To all this is added the the high tariffs that the European Union imposes on Chinese steel, so that if you can buy it there at a lower price (which is already complicated by what was explained above) this economic advantage is lost when these taxes appear, in addition to the fact that the transport shipping has also become considerably more expensive, even tripling.
Sources: Diario de Navarra | Ategi | Niusdiario