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The main Siemens company, the largest industrial manufacturer in Europe, has compared the global supply chain to a “roller coaster” due to the unfavorable economic rebound in the prices of materials such as metals and resins.
“At least in the next two quarters, we’ll see this [price] pressure, “CEO Roland Busch told the Financial Times.” Markets are very volatile. ”
The physicist, who took over the leadership of the German group in February, said the speed of the global recovery was having a “delayed effect” on Siemens ’suppliers, who were still struggling to meet demand.
The sudden rise in demand last fall, as a result of a sharp drop caused by the pandemic, “looked like a very sharp V … It was a very sharp V in China,” Bush said.
“If that happens in big markets, you’re making a roller coaster in your supply chain… You have this hysteresis effect, and that’s what we’re seeing.”
Busch’s comments were the last index of purchasing managers, Published by IHS Markit on Wednesday, showed disruptions in global supply chains – especially shortages in steel, copper, wood and plastics – have raised eurozone business entry prices for more than a decade.
PMI data, including the largest rise in average prices for goods and services since 2002, indicate that pressure is likely to rise above the European Central Bank’s target of less than 2 per cent in May for the first time since 2018.
However, central banks such as ECB President Christine Lagarde have predicted that the rebound in inflation will be “transient” and have said supply cuts will disappear by next year.
The June PMI report showed the first signs that Germany could ease the cuts “after a small drop in the number of businesses that reported longer periods of supply of materials and components.”
Siemens ’Busch said for the time being the team has passed on a rise in material prices to customers without losing business.
“Our competitors are sitting on the same boat, buying from the same suppliers,” he said. “While we have innovative products, we have the ability to appreciate them in some way.”
Siemens, which has undergone a thorough restructuring and start-up of the healthcare and energy businesses, is preparing to unveil the next step in the transformation from a conglomerate to a more focused group of companies, complete with software specialization.
“Our customers take advantage of our ability to combine the real and the digital world,” Busch said.
Focusing on the group’s core businesses, automating and digitizing factories, launching buildings and power grids, and building trains and infrastructure, they would shop in “attractive markets nearby,” he added.
Busch cited California-based Supplyframe, an online electronics component market, for a $ 700 million purchase as an example of future purchases Siemens would make.
Siemens said it expects revenue from 5.3 billion euros in software in 2020 to grow at a compound annual rate of about 10 percent over the next four years.
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