Impact of the COVID-19 virus on the European Foundry Industry

The COVID-19 out­break is a major shock for the European and global eco­nom­ies. It rep­res­ents an unpre­ced­ent situ­ation for Europe´s cit­izens, soci­ety and eco­nomy. Rep­res­ent­ing the European foundry industry CAEF sup­ports the meas­ures neces­sary to con­tain fur­ther spread­ing of the virus. We col­lect­ively see the pro­tec­tion of the health and safety of our employ­ees, sup­pli­ers and our cus­tom­ers as our utmost pri­or­ity. There­fore, com­pan­ies that main­tain their pro­duc­tion and related oper­a­tions will ensure the applic­a­tion of the required dis­tan­cing within their sites and adhere to the rel­ev­ant health and hygiene meas­ures, in close con­sulta­tion with their workforce.

This crisis is not only a major chal­lenge for pub­lic health but will also have dra­matic neg­at­ive impact on EU growth in 2020. The effect of the coronavirus on soci­ety and the global eco­nomy is unpre­ced­en­ted, with grave con­sequences for the foundry industry, dir­ectly or indir­ectly. The CAEF mem­ber states pro­duce 16,8 mil­lion tons of cast­ings per year. CAEF rep­res­ents 4.700 foundries with 290.000 employ­ees and a turnover of 43 bil­lion Euro. Main cus­tom­ers are the auto­mot­ive and the mech­an­ical engin­eer­ing sec­tor. Moreover, the foundry industry is a cross-sec­toral industry provid­ing inter­me­di­ate goods for almost every eco­nomic sec­tor. There­fore, it is vital to pre­vent shut­downs where foundries and their sup­pli­ers can provide con­tinu­ity in their oper­a­tions while respect­ing the crisis man­age­ment measures.

We appre­ci­ate the policy meas­ures that have already been announced by national mem­ber states and the EU. We wel­come the Commission´s exten­sion of the State aid Tem­por­ary Frame­work, its applic­a­tion of fully flex­ible EU fiscal rules and its set up of a 37 bil­lion Euro Coronavirus Response Invest­ment Ini­ti­at­ive to provide liquid­ity to small and medium busi­nesses. On short notice the Com­mis­sion launched the tem­por­ary ini­ti­at­ive SURE — Sup­port mit­ig­at­ing Unem­ploy­ment Risks in Emer­gency, help­ing to cover the costs of national short-time work schemes and to pre­serve jobs. This enables national gov­ern­ments to bet­ter sup­port the national economies.

We call on the European Coun­cil to ensure a coordin­ated and coher­ent approach across EU Mem­ber States to mit­ig­ate the wider socio-eco­nomic impact of COVID-19 in the EU:

• To avoid sup­ply short­ages in Europe, we must main­tain the cross-European sup­ply chains and we must be assured that trans­port­a­tion of goods across the single mar­ket are not blocked. This means redu­cing wait­ing times at intra-EU bor­ders and main­tain­ing the mobil­ity of cross-bor­der workers. 

• Moreover, it is very much needed to post­pone non-essen­tial EU pub­lic con­sulta­tions and pro­pos­als, like the BREF and NACE Revi­sion, given the need to con­cen­trate all efforts on fight­ing the pandemic. 
• Art­icle 107(2)(b) TFEU enables Mem­ber States to com­pensate com­pan­ies for the dam­age dir­ectly caused by excep­tional occur­rences. In its decision of 12 March 2020, the Com­mis­sion con­cluded that the COVID-19 out­break should be char­ac­ter­ised as such an ‘excep­tional occur­rence’. In addi­tion to avi­ation, air­ports, trade fairs and the tour­ism sec­tor, these sup­port meas­ures are also neces­sary for the industry. Moreover, applic­a­tions of these state aid schemes must be eval­u­ated very quickly to rem­edy a ser­i­ous dis­turb­ance to the eco­nom­ies of the European Mem­ber States.

Many of the mem­bers of the European Foundry Asso­ci­ation CAEF have already announced or imple­men­ted tem­por­ary clos­ures of plants due to col­lapsing demand, sup­ply short­ages, and gov­ern­ment meas­ures, and are facing cases of corona infec­tions and quar­ant­ines among their employ­ees. As our industry is highly cap­ital-intens­ive, many com­pan­ies will face sig­ni­fic­ant liquid­ity prob­lems in the short- to medium-term. This might lead to insolv­en­cies of many foundries.

After the crisis, a strong industry will be essen­tial to ensure Europe stands ready to tackle the socio-eco­nomic con­sequences of the crisis, rekindle Europe’s eco­nom­ies and safe­guard the prosper­ity and well­being of its cit­izens. There­fore, CAEF and its national mem­ber asso­ci­ations aim to pre­serve as many foundries and jobs as pos­sible through this sig­ni­fic­ant crisis and to rebuild our economy.

We stand ready to work with the European Com­mis­sion, national gov­ern­ments and other stake­hold­ers to nav­ig­ate through this crisis.

CAEF Con­tact:

Sophie Stef­fen
phone: +49 211 68 71 — 301
sophie.steffen@caef.eu