Brace for impact: WDK warns 'massive' war-linked woes to hit German auto suppliers

FRANKFURT, Germany—Russia's ongoing war in Ukraine has had a "massive impact" on the German rubber industry, including manufacturers of rubber goods, tires and seals, according to the industry association WDK.

The situation is particularly critical for the supply of carbon black, more than a third of which comes from Russia, said Boris Engelhardt, WDK general manager.

"Russian deliveries fail, and the European capacities are not sufficient to cover the demand," Engelhardt noted.

In addition, European carbon black production largely uses Russian gas as feedstock, which poses a double-risk situation in the face of increasing sanctions against Moscow.

See our full and ongoing coverage of impacts from the war in Ukraine.

Engelhardt noted that purchasing carbon black and other raw materials from outside Europe was also difficult, due to the short-term nature of the business as well as ongoing challenges in transport capacities and "massive increases" in freight rates.

"Add to that the skyrocketing energy prices; the rapid increases in production costs could no longer be passed on to the market," he warned.

According to the WDK economist, some rubber companies in Italy and France have already had to stop production due to the ongoing challenges.

"It is only a matter of time before companies in Germany have to pull the plug," he added.

In particular, the WDK general manager noted that German automotive suppliers are "massively affected" by the disruptions.

He said those suppliers are "still in COVID crisis mode" after car makers did not take components ordered in 2021.

"Their capacity planning got completely out of hand. And now the whole thing is repeated and superimposed by the Russian declaration of war against Ukraine," Engelhardt added.

While it was previously semiconductors that brought car production to a standstill, it is now the supply of cables from Ukraine that have come to a sudden stop, according to Engelhardt.

"It is precisely the unpredictability in dealing with the new shutdowns that is acutely endangering the existence of automotive suppliers," he added.

Engelhardt said WDK appealed to the CEOs of Mercedes Benz, BMW, VW, Ford and Opel two weeks ago to adjust their crisis communication with their suppliers and to seek a fair balance of interests.

"In a situation like this, you can only survive in close dialogue with one another," he concluded.