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Press Release from 2021-10-11 / Group

KfW Research: Half of all SMEs are impacted by supply bottlenecks

  • Representative findings of a September survey of small and medium-sized enterprises
  • Manufacturing and construction face biggest problems
  • Main consequences are increased procurement costs, production disruptions and price hikes

The German economy is set to grow at a slower pace this year than was expected just a few months ago. The weaker growth outlook this year is essentially due to the supply shortages of raw materials and inputs that have hit broad sections of the economy – including Germany’s SMEs. According to a supplementary survey conducted by KfW Research as part of the KfW SME Panel in September, nearly half (48%) of the approx. 3.8 million small and medium-sized enterprises in Germany are currently grappling with the consequences of supply issues.

Manufacturing SMEs have been hit particularly hard, with four in five businesses (78%) complaining about supply bottlenecks. The impact on the construction sector is no less severe, where 78% of businesses face material shortages. The share of affected SME wholesalers and retailers is slightly lower, at 63%. And even in the services sector, which is generally less dependent on inputs, around four in ten small and medium-sized enterprises nonetheless face supply bottlenecks.

One reason the SME sector has been hit on a broad scale is that many materials and inputs are currently not available in the required quantities. It is not just microprocessors but simple control elements, as well as steel, aluminium, copper and other metals, plastics and packaging materials, and timber for construction and the furniture industry. A major reason is that many businesses scaled back their capacity during the coronavirus crisis and can now respond only slowly to the rebound in demand. Other causes such as disruptions in international freight transport, ongoing trade conflicts or individual events such as the wildfires in California also play a role.

The supply bottlenecks impact SMEs in different ways.

  • The most common impact reported by small and medium-sized enterprises are increased procurement costs (29%).
  • Around one in four SMEs (28%) experience disruptions to production or service delivery as a result of a lack of raw materials or inputs. This affects manufacturing more than other sectors (56%).
  • Another one in four businesses (26%) are forced to adjust the prices of their own products or services as a result of increased prices of raw materials and inputs. Price increases are most common in the construction sector (61%).
  • Roughly 25% of all SMEs are currently defaulting on deliveries to their clients as a result of the bottlenecks. One in ten SMEs even have to turn down orders because they do not have the necessary materials. This is a particular problem in the construction industry, which comprises craft businesses from window makers to roofers (21%).
  • The supply bottlenecks have so far led to job cuts primarily in the manufacturing sector. Nearly one in ten businesses have decreased their workforce at least temporarily by reducing overtime, granting workers leave or through short-time work arrangements.

SMEs do not believe the supply bottlenecks will be resolved quickly. Only 5% of the affected small and medium-sized enterprises expect the situation to ease by the end of the year 2021. A large portion expect the difficulties to continue for another six months to a year, and nearly one in five enterprises are convinced that it will take at least a year for the situation to normalise.

“Supply bottlenecks have placed enormous obstacles in the way of small and medium-sized enterprises as they emerge from the coronavirus crisis”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “Manufacturers and construction firms are suffering the most, but so are wholesalers, retailers and service providers. This is sapping the momentum from the economic recovery that has only just started. Economic growth is likely to flatten in the coming months but will remain positive. The supply bottlenecks will take time to dissipate, but I expect the material shortages to ease at least a little in the course of the coming months. Catch-up effects can then provide impetus for a new growth spurt next year”, added Köhler-Geib.

The findings of the current special survey by KfW Research can be retrieved from
www.kfw.de/fokus (available in German only).

The dataset:
The current supplementary survey on supply bottlenecks is based on the KfW SME Panel, a representative tracking survey of small and medium-sized enterprises in Germany. The basic population of the KfW SME Panel includes all private-sector companies from all industries whose annual turnovers do not exceed EUR 500 million. The survey was conducted by the Financial Services Division of GfK SE on behalf of KfW Group during the period from 1 to 10 September 2021. Responses from a total of 2,400 enterprises were evaluated. As the supplementary survey was linked to the main database of the KfW SME Panel, the results of the supplementary survey provide a representative picture of the current impact of supply bottlenecks.


Portrait Christine Volk


Christine Volk

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