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Is EMS in Europe Headed for a Crisis?

By Dieter Weiss

Having reported in our last article on the state of European EMS Industry 2020 before the Covid 19 crisis, we now want to look at current developments in Europe.

Dieter G WeissFirst of all, yes, there are plenty of doubters in Europe who equate the Corona pandemic with a flu epidemic. After all, 25,100 people died from the flu in Germany in the 2017/2018 winter season alone. This is also used as a significant number in the reasoning. Whether this can be compared so easily with today’s problem is disputed by the experts, but unfortunately also by a lot of people without any expertise in the field.

Everyone thinks they have to speak up, and some even think they should give advice to the government on how to proceed. Sometimes it would be better for some people to just shut up.

In the current situation, it is still far too early for Germany to say whether and how to compare it and whether or not there are mortality rates in the normal range. In Italy, the spread of the virus is already more advanced and the figures can be evaluated. With about 61 million inhabitants, a daily mortality rate of about 2000 people is considered normal. However, Italy is now 20% above this figure. At the heart of the epidemic, in Bergamo, normally 10 people died a day, where the mortality rate is now 20 people (for non-statisticians, that’s 100% more)

The actions of the various governments in Europe (with the exception of the UK) are therefore entirely appropriate and governments are following the recommendations of epidemiology and medical experts. Of course, the question inevitably arises as to what impact this has on the European economy.

There is no uniform approach in Germany. We have a federalist system and, especially in the crisis, many citizens get the impression that every politician is doing what he wants. While the Prime Minister of Bavaria, Markus Soeder, prefers the hard line, comparable to Austria, the mayor of Berlin tends to say “it will go away again”.

Schools, kindergartens and shops are closed now in Germany, with the exception of grocery stores and pharmacies. It is currently unclear how long this will last. The problem is the long incubation period of Covid 19, which is between 8 and 12 days. In some places as well as in Bavaria there is already a lockdown, which is otherwise rather the exception.

In Germany, there were 226,000 retailers in 2019, of which 64,000 will probably disappear by 2030 according to the Cologne Institute of Trade research. This process is primarily due to the different shopping habits of people (towards more online shopping), but will now be accelerated by the epidemic.

In the technology industry, which is very much dominated by the automotive industry in Germany, a medium-sized disaster is developing. One car factory after another shuts down production and closes plants. As a result, the subcontractors follow suit. Bosch has already registered short-time work for 35 plants. What impact does this have on the EMS industry?

An answer to this question can only be given by the EMS industry itself. A group of EMS companies has been brought together in D-A-CH who are willing to participate in a special form of survey. From March 27th onwards, the current situation will be queried and evaluated four times every three weeks.

The questions relate to the sick leave at the reporting companies, how much production capacity is lost due to sick leave, how the order intake has developed due to the current situation and what changes there are in the procurement of components. The evaluation is intended to provide a timely overview of the situation in the EMS industry and will be reported at regular intervals on this platform. Stay tuned.

Weiss Engineering