One minute an electronic part cost $18. Three months later it was suddenly $1,150. What are you doing then? “We called the customer,” says Willem van der Leegte, CEO of industrial company VDL. He said: buy anyway, because I must have the product.
During the presentation of the 2021 figures for industrial group VDL (16,000 employees) in Eindhoven on Friday, one thing quickly became clear: European industry is in a chaotic, unclear situation, which makes it difficult for companies like VDL. It is war for chip shortage on the corona crisis, which means that fighting for parts and business units is forced to a standstill.
CEO Willem van der Leegte outlined a situation that the widely spreading VDL, producer of cars to chip machine parts, has never experienced before. Suppliers of raw materials come up with quotations that are only valid for one hour, because otherwise the batch of steel or aluminum goes to another party. The company has lost millions more on energy costs, while many employees are still at home due to corona contamination.
In the meantime, the largest business unit, the Limburg car factory VDL Nedcar, has been standing still for almost all of March. It does not receive cables from Ukrainian factories. And the war has also seriously disrupted the steel and aluminum market. Because Russian and Ukrainian production has largely ceased, the price of these materials has risen sharply.
Cables from Ukraine
VDL does not dare to make a prediction before 2022. According to the group, the order book, also known as the ‘barometer of the manufacturing industry’, is well filled. But the question is whether the orders can also be made.
Also read: Without the cables from Lviv there are no Limburg Minis
In any case, a restart of production for BMW is planned for the Nedcar car factory on Monday 28 March. Then there will be enough cables from Ukraine and other factories. At the same time, the chip shortage has not yet been fully resolved, warned Van der Leegte.
In 2021, the family business presented a turnover of almost 5 billion euros. That is more than in the first corona year, but a lot lower than in 2019, when turnover amounted to almost 5.8 billion euros. This was largely due to shortages, which also caused many problems last year. For example, Nedcar was out of action for a total of 48 days due to a lack of chips. VDL also faced a cyber attack that shut down the systems for almost a month. The company is still unable to say exactly how much that cost, but the damage is “in the millions”, according to Van der Leegte. The profit last year was higher than in 2020, at 145 million euros.
Van der Leegte also issued a warning: if the industry on the European continent continues to be so disrupted and, among other things, the gas price so high, this could have consequences for its competitive position. He is in line with other board chairmen, who have expressed themselves in similar terms in recent weeks. This is what DSM CEO Dimitri de Vreeze said last week NRC that persistently high gas prices could make production on other continents more attractive for DSM. Volkswagen CEO Herbert Diess also said he is looking at more production in the United States and Asia.
A version of this article also appeared in NRC Handelsblad of 26 March 2022
A version of this article also appeared in NRC on the morning of March 26, 2022
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