Suppliers Face Monthslong Operational Impacts in the Aftermath of Severe Floods in Europe
With the death toll officially surpassing 180 and clean-up efforts still ongoing, the aftermath of last month’s devastating floods in Germany and much of Western Europe has revealed not only its dire toll on human lives, but also the extensive damages inflicted on businesses and infrastructure in the region. The impacts of the events have the potential to disrupt industrial supply chains for several more months.
As floodwaters receded in recent weeks across Germany, Belgium, and the Netherlands and companies began damage assessments at their facilities, reports of significant impacts on machinery, warehouse stock, and production lines due to floodwater have emerged. As a result, some industrial businesses have been forced to shut down all operations, issue profit warnings, and declare force majeure, i.e., invoking a contractual clause that protects against the inability to deliver goods due to an unforeseen event.
An original analysis of company statements and media reports conducted by Everstream Analytics uncovered that, in total, more than 85 companies in western Europe have so far experienced impacts from the flooding events. While some have already resumed operations following a brief period of disruption, others have warned that the damages from floodwater were so significant that it would take several months until operations fully normalize.
According to a tally by Everstream Analytics, the brunt of the impact has been borne by companies along smaller, largely unknown rivers in western Germany, in particular in the states of North Rhine-Westphalia as well as Rhineland-Palatinate, while the effects of the floods in Belgium and the Netherlands have been limited to a few locations, mainly along the Maas/Meuse River.
Companies east, west, and south of Cologne report most damages
While steelmaker ThyssenKrupp AG was among the larger multinational conglomerates to report supply chain disruptions when it declared force majeure on steel deliveries from its site in Duisburg, Germany, several small and mid-sized companies in areas east, west, and south of Cologne were the first to report extensive damages from the floods in the first 24 hours after some smaller rivers burst their banks in parts of western Germany.
In the Oberbergischer Kreis, home to hundreds of automotive, mechanical engineering, and metal processing suppliers, 11 companies located in the industrial areas of Hückeswagen, Wipperfürth, and Radevormwald reported significant damages as soon as the Wupper River started to overflow and flood nearby areas on July 14. Among the affected companies were mechanical engineering supplier Klingelnberg GmbH, which has already issued a profit warning for 2021 due to the floods, and automotive supplier Voss Automotive GmbH, which produces high-precision components for the Volkswagen Group and braking specialist Knorr-Bremse.
Other areas with a high number of companies reporting impacts on production include the nearby Märkischer Kreis (11) and the city of Hagen (10), a steelmaking hub south of the Ruhrgebiet, both located along the flooded Lenne River, as well as the city of Stolberg, geographically located between Aachen and Cologne. Several areas west and south of Cologne, such as Euskirchen (6) and Bad Neuenahr (5) also reported substantial damages at their business facilities.
Wide range of industrial sub-tier suppliers affected by the floods
A breakdown of the affected companies per sector revealed that metal processing companies (15), consumer goods (13), and steel producers (11), were among the hardest hit by the floods. In the German city of Hagen, which hosts dozens of steel processing companies, floodwater damaged manufacturing facilities and rail tracks used to carry raw materials or finished goods from and to the sites, forcing companies such as Deutsche Edelstahlwerke (DEW) and Schmiedag GmbH to shut down production or declare force majeure.
Operations were also disrupted at petrochemical companies (9), in particular within the cluster near the Dutch city of Geleen. There, chemical companies including Fibrant, Sabic, and AnQore all declared force majeure in the aftermath of the floods near the Maas River.
Other sectors experiencing significant disruption from the flooding include metal processing (8), automotive (7), industrial machinery (6), and electrical equipment (6). In Bad Neuenahr, a key facility of ZF Friedrichshafen AG that produces dampers for premium cars sustained severe damages that will take several months to repair, with few possibilities to shift production to other unaffected plants, according to media reports and company statements.
In addition, longer production outages at smaller and mid-sized suppliers of metal parts and electrical components have the potential to cause considerable supply chain disruptions as these tend to serve a wider range of industries than specialized automotive suppliers. The floods had a particularly devastating impact on multiple suppliers of cables and connectors, such as Kabelwerk Eupen, Leoni Kerpen, Stocko Contact, PFLITSCH GmbH & Co. KG, and Katimex Cielker, which supply companies in the telecommunications, railway, aerospace, electronics, and household appliances.
Recommendations
As downstream impacts from the floods at sub-tier supplier levels are likely to continue in the coming months, Everstream Analytics outlines below a series of recommendations to help companies navigate through the latest disruptions caused by the severe flooding situation in western Europe:
- Contact sub-tier suppliers: Amid the ongoing damage assessments, customers with supply chain connections to the affected areas should get in touch with potentially affected suppliers to identify impacts on supplies and deliveries. Due to power and telecommunications outages, in particular in the Ahr valley south of Cologne, it may be challenging to reach supplier contacts via the previously established communication channels.
- Provide support for affected suppliers: Depending on the extent of the damages, small and mid-sized suppliers may face existential financial difficulties in rebuilding facilities and bringing operations back online. Customers should therefore explore where financial support could help mitigate potential long-term disruptions in supply, in particular if no alternative sources can be available in the short to medium term.
- Identify alternative sources: To mitigate potential delivery delays and supply shortages, organizations are encouraged to concentrate on finding alternative sources using Network Risk Assessment solutions for the most critical components, i.e., those with the highest impact on revenue, from other geographical locations and/or suppliers and arrange emergency air freight if necessary to prevent stock-outs and operational downtime.
Appendix 1: List of companies with reported impacts on production due to flooding in western Europe in mid-July 2021. Source: Everstream Analytics
| Company name | Country | Area | Sector | Force Majeure declared |
| Stocko Contact Gmbh | Germany | Euskirchen | Electrical Equipment | Yes |
| Hochwald Foods GmbH | Germany | Erftstadt | Consumer Goods | No |
| Schoeller Werk GmbH | Germany | Euskirchen | Steel Processing | No |
| Sabic Polyolefine GmbH | Germany | Gelsenkirchen | Petrochemicals | Yes |
| SI Coatings GmbH | Germany | Wuppertal | Steel Processing | No |
| Sinziger Mineralbrunnen GmbH | Germany | Bad Neuenahr | Consumer Goods | No |
| Arla Foods GmbH | Germany | Bitburg-Prüm | Consumer Goods | No |
| Leoni Kerpen GmbH | Germany | Stolberg | Electrical Equipment | Yes |
| Coca-Cola Enterprises | Belgium | Liege | Consumer Goods | No |
| Andreas Stihl GmbH | Germany | Bitburg-Prüm | Industrial Machinery | No |
| Gerolsteiner GmbH | Germany | Vulkaneifel | Consumer Goods | No |
| Katimex Cielker GmbH | Germany | Vulkaneifel | Electrical Equipment | No |
| Pfeifer & Langen GmbH | Germany | Euskirchen | Consumer Goods | No |
| Schmiedag GmbH | Germany | Hagen | Steel Processing | No |
| Deutsche Edelstahlwerke Specialty Steels GmbH | Germany | Hagen | Steel Processing | No |
| Lindenberg-Anlagen GmbH | Germany | Rheinisch-Bergischer Kreis | Mechanical Engineering | Yes |
| HME Copper Germany GmbH | Germany | Märkischer Kreis | Copper Processing | Yes |
| Risse + Wilke Kaltband GmbH | Germany | Märkischer Kreis | Steel Processing | Yes |
| H. D. Lenzen GmbH | Germany | Hagen | Steel Processing | Yes |
| Peter Greven GmbH | Germany | Euskirchen | Petrochemicals | Yes |
| Kabelwerk Eupen AG | Belgium | Liege | Electrical Equipment | Yes |
| Fibrant BV | Netherlands | Geleen | Petrochemicals | Yes |
| Wieland-Werke AG | Germany | Mettmann | Copper Processing | No |
| Sabic BV | Netherlands | Geleen | Petrochemicals | Yes |
| Vinnolit GmbH | Germany | Erftstadt | Petrochemicals | Yes |
| Akro-Plastic GmbH | Germany | Bad Neuenahr | Plastic Compounds | No |
| Ecobat Technologies GmbH | Germany | Stolberg | Lead Processing | Yes |
| Dalli-Werke GmbH | Germany | Stolberg | Consumer Goods | No |
| Trivium Packaging GmbH | Germany | Erftstadt | Consumer Goods | No |
| Vinnolit GmbH | Germany | Erftstadt | Petrochemicals | Yes |
| ThyssenKrupp AG | Germany | Duisburg | Steel Processing | Yes |
| Galler Chocolatiers | Belgium | Liege | Consumer Goods | No |
| ZF Friedrichshafen AG | Germany | Bad Neuenahr | Automotive | No |
| Radici Chemiefaser GmbH | Germany | Hof | Petrochemicals | No |
| Wikutec GmbH | Germany | Hof | Plastic Compounds | No |
| Härterei Kirchhoff GmbH | Germany | Märkischer Kreis | Metal Processing | No |
| Superior Industries GmbH | Germany | Märkischer Kreis | Automotive | No |
| AnQore BV | Netherlands | Geleen | Petrochemicals | Yes |
| Aurubis Stolberg GmbH | Germany | Stolberg | Copper Processing | Yes |
| BWS Philipp Boecker + Wender Stahl GmbH | Germany | Hagen | Steel Processing | No |
| GKN Sinter Metals Components GmbH | Germany | Oberbergischer Kreis | Metal Processing | No |
| ThyssenKrupp Bilstein GmbH | Germany | Hagen | Automotive | No |
| ABC Umformtechnik GmbH | Germany | Ennepe-Ruhr-Kreis | Automotive | No |
| Schmidt & Clemens GmbH | Germany | Oberbergischer Kreis | Metal Processing | No |
| Radium Lampenwerk GmbH | Germany | Oberbergischer Kreis | Lighting | No |
| Albrecht JUNG GmbH | Germany | Märkischer Kreis | Electrical Equipment | No |
| Voss Fluid GmbH | Germany | Oberbergischer Kreis | Mechanical Engineering | No |
| GKN Sinter Metals GmbH | Germany | Oberbergischer Kreis | Metal Processing | No |
| Klingelnberg GmbH | Germany | Oberbergischer Kreis | Mechanical Engineering | No |
| SN Maschinenbau GmbH | Germany | Oberbergischer Kreis | Industrial Machinery | No |
| Hesterberg & Söhne GmbH | Germany | Ennepe-Ruhr-Kreis | Automotive | No |
| Huckenbeck GmbH | Germany | Ennepe-Ruhr-Kreis | Metal Processing | No |
| Aug. Refflinghaus Söhne | Germany | Ennepe-Ruhr-Kreis | Industrial Machinery | No |
| Kind Materials GmbH | Germany | Oberbergischer Kreis | Aerospace | No |
| August Rüggeberg GmbH & Co. KG | Germany | Oberbergischer Kreis | Metal Processing | No |
| Voss Automotive GmbH | Germany | Oberbergischer Kreis | Automotive | Yes |
| Outokumpu Nirosta GmbH | Germany | Oberbergischer Kreis | Steel Processing | No |
| Hoffmann + Schelle GmbH | Germany | Oberbergischer Kreis | Packaging | No |
| Goldsaat Agrartechnik GmbH | Germany | Bitburg-Prüm | Industrial Machinery | No |
| Neuhäuser Präzisionswerkzeuge GmbH | Germany | Bitburg-Prüm | Metal Processing | No |
| Hagener Feinstahl GmbH | Germany | Hagen | Steel Processing | Yes |
| Schake GmbH | Germany | Hagen | Metal Processing | No |
| Coca-Cola Erfrischungsgetränke AG | Germany | Bad Neuenahr | Consumer Goods | No |
| Corman SA | Belgium | Liege | Consumer Goods | No |
| Cabot Plastics | Belgium | Liege | Petrochemicals | No |
| Trefimetaux SAS | France | Grand Est | Copper Processing | No |
| Randack Group | Germany | Hagen | Metal Processing | No |
| Saint-Gobain Building Glass | Germany | Stolberg | Construction Materials | No |
| AixTex Components GmbH | Germany | Stolberg | Electric Equipment | No |
| Brockhaus Group | Germany | Märkischer Kreis | Steel Processing | No |
| Urban Metallverarbeitung GmbH | Germany | Hagen | Metal Processing | No |
| VDM Metals Group | Germany | Märkischer Kreis | Metal Processing | No |
| KMD Group | Germany | Stolberg | Copper Processing | No |
| Hermann Klincke J. H. Sohn GmbH+Co. KG | Germany | Märkischer Kreis | Mechanical Engineering | No |
| DWL-WOLF GmbH | Germany | Märkischer Kreis | Metal processing | No |
| MÄURER & WIRTZ GmbH & Co. KG | Germany | Stolberg | Consumer Goods | No |
| keeeper tableware GmbH | Germany | Euskirchen | Consumer Goods | No |
| EBRO ARMATUREN Gebr. Bröer GmbH | Germany | Hagen | Mechanical Engineering | No |
| Prym Group | Germany | Stolberg | Automotive | No |
| PFLITSCH GmbH & Co. KG | Germany | Oberbergischer Kreis | Electrical Equipment | No |
| Dreherei Voeste GmbH | Germany | Ennepe-Ruhr-Kreis | Metal Processing | No |
| Maschinenbau-Technik W. Dürbaum GmbH | Germany | Düren | Industrial Machinery | No |
| FRANZ SCHÜRHOLZ GmbH | Germany | Soest | Metal Processing | No |
| Duotherm Heiz- und Isoliersysteme GmbH | Germany | Euskirchen | Industrial Machinery | No |
| Amco Plast GmbH | Germany | Hochsauerlandkreis | Plastic Compounds | No |
| Austrocel GmbH | Austria | Salzburg | Textiles | No |
| Wilhelm Humpert GmbH | Germany | Soest | Metal Processing | No |
| PolyTapes GmbH | Germany | Soest | Packaging | No |
| Haribo GmbH | Germany | Bad Neuenahr | Consumer Goods | No |