German firms: Disadvantages in resource supplies | Business| Economy and finance news from a German perspective | DW | 10.06.2013
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German firms: Disadvantages in resource supplies

A renowned German think tank has found out that smaller companies in the country are especially concerned about future rare material supplies. They fear that delivery conditions might put them at a disadvantage.

A fresh study by the Cologne Institute for Economic Research (IW) showed every second German industrial firm deplores disadvantages in raw material supplies vis-a-vis competitors from resource-rich nations.

A poll among 2,000 domestic companies revealed that the latter enjoyed more attractive purchase prices, fewer environmental regulations and a higher supply security.

"Every fifth company polled says this results in German firms' lower competitiveness," said IW chief Michael Hüther during a presentation of the study in Berlin.

Insufficient precautions

Steady access to raw materials – including metals like steel, copper and cobalt – were of the essence for Germany, which has to import almost all of the metals needed for industry, the survey pointed out.

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Most raw materials were not imported to Germany directly, but rather indirectly through suppliers of intermediate products, the study maintained, which in term meant companies faced enormous difficulties when a major supplier dropped out of the delivery chain. But the institute warned that every 10th industrial company in Germany had not made any precautions for such a scenario, adding that among small and medium-sized firms only every fourth had a plan B in their drawers.

The Cologne-based think tank argued that policy makers had a pivotal role in ensuring future raw materials security through free-trade agreements to remove protectionism, export duties and other instruments hampering free markets. It said European nations should better coordinate their raw materials and energy policies to have more weight in international negotiations.

The German government has already started minimizing future supply risks by inking long-term raw material partnerships with Mongolia and Kazakhstan.

hg/dr (dpa, Reuters)

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