FRANKFURT-German rubber product makers don't expect 1996 sales to match a lively 1995 performance, according to the nation's rubber trade association. Uncertain growth prospects this year throughout Europe leave Germany's rubber product manufacturers with only ``subdued expectations''-growth of 1 to 2 percent-for the rest of 1996, according to a report from the manufacturers association, WdK.
The pessimistic forecast follows 1995's positive results: sales rose 5.7 percent to $11 billion, tonnage sold climbed 5 percent, and capacity utilization stood at 89.6 percent.
The industry's profitability in 1995-estimated at about 1 to 2 percent of sales-was characterized as ``unsatisfactory'' by Peter Haverbeck, managing director of Continental A.G.'s non-tire products division and chairman of the WdK.
The performance of the tire and non-tire segments differed markedly, as tire makers pushed through price increases and technical goods producers suffered a drop in value per ton. The tire producers also benefited from a higher than expected demand for winter tires during the fourth quarter.
The spike in raw materials prices that plagued producers throughout late 1994 and 1995 peaked in the second half of 1995. Prices have fallen somewhat, although they're still significantly higher than in January 1994.
Rationalization of operations in Germany and the transfer of some production to sites outside of Germany led to a 2.1-percent drop in employment by WdK members-to 65,500 at year's end. Personnel costs represent about 37 to 39 percent of a rubber product maker's overall costs, and the majority of firms are facing further increases this year as master contract negotiations are on tap.
After two years of declining or stagnant investment measures, WdK members raised capital spending last year about 7 percent to $512 million, although a large share of the increase went to subsidiary or affiliate operations outside of Germany. WdK gave no precise figures at this time reflecting the foreign share, but earlier forecasts put the figure at 10 percent and rising.
With 1995 industry sales up 5 percent to $11 billion, the investment rate rose slightly to 4.6 percent. For 1996, however, the number of companies planning lower investments this year rose markedly and the number planning to increase over 1995 fell measurably.
Likewise, the share of WdK members planning increased spending on research and development dropped to 37 percent from 43 percent. Rubber product companies traditionally spend 3 to 4 percent of sales on R&D activities.
Exports of rubber goods have shown double-digit growth each of the past two years, WdK data shows, and now represent 25 percent of production.
WdK has 84 members, representing about 85 percent of German rubber production.