The mechanical engineering sector is an essential part of the German economy, but how is the industry doing financially? Around 1.4% of companies in the mechanical engineering sector were unable to pay their bills in 2019. This insolvency rate is more than twice as high as the cross-sector average of 0.6%. Compared to the previous year, the number of insolvent companies rose sharply by 0.4% - even though the number of active companies in the sector fell significantly in 2019.Only around 12% of companies fell into the over-indebtedness trap in 2019 - compared to around 14% in the German economy as a whole. The rule of thumb is that the larger the company, the higher the risk of over-indebtedness. In the mechanical engineering sector, however, the opposite is true: just under one in five micro-entrepreneurs, but only around 2% of large companies have taken out loans and credits.
Many companies do not pay their invoices on time - on average, German companies pay around 5.1 days after the agreed payment deadline. The mechanical engineering sector is more disciplined, taking an average of 4.3 days too long to transfer the money. Rising insolvency figures in the previous year are a harbinger of the stormy times that await the mechanical engineering industry this year. The President of the German Engineering Federation (VDMA), Carl Martin Welcker, expects a real drop in production of up to 5%, triggered by the difficult economic situation surrounding the coronavirus.
www.creditsafe.com
