Demand is going through the roof, the order books are full to the last page, the machinery in the factories is running at full capacity - and the supply chains are stretched to the point.

Whether at the semiconductor manufacturer, antenna and control cabinet manufacturer or battery manufacturer, the same picture emerges everywhere.

There is no end in sight, says Wolfgang Weber, Chairman of the Management Board of the Association of the Electrical and Digital Industry in Germany, ZVEI.

On the contrary.

Stephan Finsterbusch

Editor in business.

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Three quarters of the association's member companies stated in a survey presented this Monday that the situation in the supply chains is currently worsening again, and one third even calls this tightening “clear”. Almost half of the companies expect the current situation to last until mid-2022; the other half are not giving the all-clear, but rather assume that the situation will not ease beyond the middle of next year.

Many companies are already steering.

Car manufacturers such as BMW and Stellantis enter into long-term exclusive contracts with chip manufacturers in order to secure their own supply in the long term.

Volkswagen even wants to design its own chips in the medium term.

The pharmaceutical company Merck is working with the data specialist Palantir to set up a database system in order to be able to identify weak points in the supply chains of the chip industry at an early stage and to remedy them in good time.

Key industry is sounding the alarm

After a continued tense situation, the prospects are driving the worry lines of many customers deeply on the forehead: car and machine manufacturers, chemical and pharmaceutical companies. Because the electrical and digital industry is one of the key areas of the German economy. With 900,000 employees nationwide and a total turnover of more than 180 billion euros, the sector bundled in the ZVEI is one of the largest branches of industry in Germany in terms of employees.

In addition, the association's member companies employ a further 800,000 people abroad.

The added value of this industry is positioned worldwide and well networked globally.

Local companies invest almost 20 billion euros each year in research and development alone.

This makes the electrical and digital industry one of the innovation drivers in the German economy.

If there is a crunch in the supply chains here, it can be felt in all industries - and that has consequences.

Corona highlights the disadvantages of production strategies

One reason for the worsening situation is, among other things, oversubscribed orders, says Weber. Many customers ordered more than they actually needed. In other words: hamster purchases. “Around half of our member companies notice that their customers are ordering more than they need. A sixth to a large extent, ”says Weber. “But it's not just the customers who behave this way. Two thirds of companies in the electrical and digital industries are also forced to place more orders in order to avoid shortages as much as possible. "

In order to be better prepared for bottlenecks, 70 percent of the companies surveyed by the ZVEI rely on diversifying their supply chains;

almost half of the companies are targeting longer-term supply contracts;

65 percent want to put more on stockpiling.

Warehousing on a larger scale is back in trend.

But with this one pillar of modern production processes is shaking: just-in-time production.