Too little, too late and too expensive…

Two topics now dominate many discussions: the raw material/material shortage and price increases. LIFTjournal interviewed the deputy chairman of the VFA-Interlift and managing director of the Schaefer Group, Michael Gubisch, about this.

Supply chain disruption, price explosion: how bad is the current situation for component manufacturers?
Gubisch: In my opinion, there are currently hardly any component manufacturers or lift builders who aren’t affected by these problems, directly or indirectly. The dislocations in the supply chains and the rise in material prices on the world market have been further exacerbated in recent months by the bottlenecks for raw materials, the worldwide Corona situation and after the incident in the Suez canal. The normalisation of the situation to be expected, in particular due to the Ukraine war, has not occurred and even more challenges have resulted.

The reoccurrence of Corona cases in China and adherence of the Chinese government to a zero-Covid strategy has apparently led to people no longer being able to leave their flats in some major cities and as a result production in part grinding to a halt. Consequently, logistics processes will remain disrupted in the long term and the container backlogs in the harbours will increase rather than decrease.

The dislocations mentioned and their consequences are not just limited to deliveries from the Asian markets, but also have direct effects and above all knock-on effects on the supply chains inside Europe.

The associated shortage of components, such as microchips, displays from Asia and in the meantime also cables from the Ukraine have led to the comparatively "little lift sector" being in direct procurement competition with industrial sectors such as the automotive or entertainment electronics sector. As a result, existing products may have to be redesigned to substitute electronic components no longer available and in order to remain capable of delivery.

What is the feedback of the members?
Gubisch: This was of course a major topic at this year's interlift. Good discussions took place between suppliers and customers and coming up with problem solutions was possible, since according to statistics 70 percent of the European decision-makers took part in the interlift.

Photo: © Petr Jilek

In my view, these problems will once again mean having to find European procurement sources to an increasing extent in the interests of control, reliability and short delivery times, which could also bring about an increase in the price level.

At Schaefer, we’ve been able to master these challenges well in recent months and as a result preserve our accustomed delivery performance. Thanks to long-term strategic purchasing planning with corresponding framework agreements, the effects will hopefully continue to be quite manageable for Schaefer. However, we also had in part to deal with isolated price increases of over 80 percent and unacceptably long delivery times in recent months. One advantage here was our high vertical integration of production at all locations and our wide product portfolios, potential alternative components.

How is the VFA currently supporting its members?
Gubisch: The VFA network is helping members by bringing the companies together and promoting the exchange of knowledge and opinions. The joint experience of sector colleagues and practical discussions are helpful guides and sources of ideas for handling this situation. interlift ’22 was once again an ideal platform for this purpose.

What do you think: how will prices continue to develop?
Gubisch: Unfortunately, it has to be assumed that apart from the above-mentioned points regarding the bottleneck on the raw material markets, the volatility of prices, logistics and delivery time problems, Corona restrictions, currency fluctuations and inflation, the incalculable share of the costs of the planned energy transition in Europe will influence the market. I personally see this as a great challenge.

The focus at the moment is on maintaining the capacity to deliver. Developing redundant sources of supply and not just looking at prices in this regard will probably once again become necessary. To secure the supply chain, companies will in future establish a wider base, combing local and international suppliers.

Ulrike Lotze conducted the interview.

More information: vfa-interlift.de