One in four (25 percent) companies sees the beginning of a wave of insolvencies in their industry or expects one within the next 24 months. German companies are taking countermeasures: around half (47 percent) are currently in the process of restructuring or are planning to do so in the short term. They are making very concrete preparations for the loss of potential customers and suppliers.
Photo: Dreamstime.
New Insights
This is the result of a current survey conducted by the market research institute Verian (formerly: Kantar Public) on behalf of the management consultancy FTI-Andersch in the automotive, mechanical and plant engineering, consumer goods and retail sectors.
More than a quarter (26 percent) of companies in the mechanical and plant engineering and consumer goods sectors are currently undergoing restructuring. 57 and 52 percent of the industrial and commercial companies surveyed respectively want to postpone investments. One in four of the retailers surveyed (24 percent) sees opportunities for takeovers in their own industry.
In the retail sector (non-food), 34 percent of respondents see or expect a wave of insolvencies. In the consumer goods (26 percent) and automotive industries (24 percent), this is a quarter each, and in the mechanical and plant engineering sector, 14 percent.
Regardless of whether the respondents already describe the bankruptcies as a 'wave', two out of three companies in the retail sector (60 percent) stated that they are seeing more frequent or even significantly more frequent (12 percent) bankruptcies in their own industry, in the consumer goods industry 46 percent (significantly more frequent: six percent), in the automotive sector (significantly more frequent: twelve percent) and in mechanical and plant engineering (significantly more frequent: four percent) 40 percent each.
'We have not seen a wave of insolvencies so far, but we have seen a significant increase in levels,' says Christian Säuberlich, Senior Partner and Spokesman of the Board of FTI-Andersch, the consulting unit of FTI Consulting in Germany that specializes in restructuring, business transformation and transactions. 'The results of our study show that a significant proportion of companies see the next 24 months as a major challenge. And it could get even more difficult, because there are many refinancings due by the end of 2025. This could still be a moment of truth for many companies. What makes me optimistic, however, is that almost half of the companies are actively counteracting this and have initiated important restructuring and transformation measures in order to both survive this difficult phase and reorient themselves in the long term.'
Companies from industries with lower insolvency expectations are more likely to be in restructuring
The companies surveyed are responding to the impending wave in three ways: restructuring, concrete measures for defaults and examining takeover opportunities.
Half (47 percent) of the companies are currently planning and implementing restructuring measures within their own company. More than a quarter (26 percent) of the companies in the mechanical and plant engineering and consumer goods sectors are currently undergoing restructuring, while the figure is 22 percent in retail and one in five respondents in the automotive industry (18 percent).
Clear majorities are preparing for customer and supplier failures in their own industry with concrete measures. In industry, companies are focusing primarily on measures to secure their supply chain: 71 percent are tapping into new suppliers, 67 percent are conducting regular screening of their suppliers - and 65 percent now want to open up new markets on the customer side. The picture is different in retail: seven out of ten companies (70 percent) are focusing primarily on building up financial reserves to compensate for sales losses. Only half (48 percent) are now examining the supply structure.
Christian Säuberlich says: 'The figures confirm what we also see in practice. Especially in companies that are financially more robust, many restructurings are carried out with the aim of avoiding a crisis in the first place. In the retail and automotive industries, on the other hand, these restructurings also occur, although much more often when the company is already close to insolvency or has already emerged from insolvency.'
Strong market participants are now looking for takeover targets
There are also German companies that see opportunities in the current situation - not only from abroad. They are increasingly exploring takeovers due to the expected bankruptcies. 62 percent of companies in the consumer goods industry see opportunities for takeovers in the looming wave of bankruptcies, 42 percent in the automotive industry and 29 percent in mechanical and plant engineering, as well as almost one in four of the retailers surveyed (24 percent).
'These are the companies that have done their homework in the past and now have a strong position in their industries. Certain consolidation efforts in the industries can help them to scale better in the future and to have a stronger presence on the market,' says Christian Säuberlich. 'We are also observing another driver of company takeovers: more and more entrepreneurs are currently unable to find successors, partly as a result of demographic change.'
Majority wants to postpone investments
Verian's study reveals that not only short-term problems need to be overcome, but also long-term challenges. The biggest structural challenge remains the shortage of workers (81 percent of industry say this; 80 percent of trade say this), followed by bureaucracy (73 percent of industry; 80 percent of trade). Energy prices are also continuing to cause problems for the manufacturing sector (69 percent), and trade is struggling with changes in purchasing behavior and the general mood of consumers (70 percent).
'Of course, survival must be prioritized over future measures,' says Christian Säuberlich. 'But one thing is also clear: Anyone who does not focus directly on long-term transformation now runs the risk of not being sufficiently competitive again after an acute survival phase. This also applies to companies that are supposedly still healthy during this time.'
More information:
FT Consulting
www.fti-andersch.com