Delays in delivery, price increases that worry companies
Greek industry is suffering not only from soaring commodity prices, but also from delays in the delivery of raw materials; this is disrupting the production process just as the local industry was beginning to recover from its slump.
The latest Purchasing Managers Index (PMI) data collected by IHS Markit is indicative of the hurdles that delivery delays pose for supplying local industry. The index reading in September was 58.4 points, slightly lower than the 59.3 points in August.
IHS Markit notes that “the production growth rate was the second fastest recorded since April 2019, although it weakened due to shortages of raw materials which contained production capacity.” He adds that “the steady increase in new orders and the significant and continuing shortages of materials in September led to the largest increase in raw works ever recorded in this research.”
According to knowledgeable IHS Markit economist Sian Jones, industrial production in Greece is expected to register an annual increase of 6.6% for the whole of 2021, while the increase in production may continue to be contained in the last quarter of the year because as long as the supply chain remains unreliable.
When raw materials arrive, their price is often prohibitive for any profit margin, however: increases in material prices, as well as energy and transportation costs, leave little room for competitiveness. Although the losses they generate can be offset by the increased volume of orders that companies receive thanks to the restart of the economy inside and outside Greece, companies are not able to to process orders on time.
For example, the increase in polypropylene has worried a series of manufacturing companies; Not only are companies like Thrace Plastics forced to raise their own prices, but other companies like soap maker Papoutsanis face the dilemma of whether to absorb the increases themselves to remain competitive.