Germany’s small and medium-sized component suppliers could be under threat of insolvency if they cannot get access to financing soon.
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So said the chief executive of bearing manufacturing Schaeffler and the chief economist of the world’s largest credit insurer, Euler Hermes.
Schaeffler CEO Juergen Geissinger told Automobilwoche that “the dangers of a credit freeze are virtually existential in nature for many small and mid-sized firms.”
Romeo Grill of Hermes said that many suppliers and dealers would cease to exist next year. He said the supplier industry was headed towards consolidation and that the number of companies would decline.
Privately-owned small and medium-sized enterprises, the so-called Mittelstand, make up a large proportion of the German supplier industry.
Karl-Thomas Neumann, CEO of Continental AG, said his company was looking to thin out its supplier base. “There are too many mid-size firms and the companies are not positioned globally,” he said.
Geissinger warned that loans to the automotive industry should not be made at high interest rates. He said that his company is struggling with the collapse in demand, with orders down 20% in the past two months.
