Suppliers Face Monthslong Operational Impacts in the Aftermath of Severe Floods in Europe

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.

Figure 1: Companies affected by flooding events in western Europe, by country. Source: Everstream Analytics

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

Figure 2: Companies affected by flooding events in western Europe, by area. Source: Everstream Analytics

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.

Figure 3: Companies affected by flooding events in western Europe, by sector. Source: Everstream Analytics

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 nameCountryAreaSectorForce Majeure declared
Stocko Contact GmbhGermanyEuskirchenElectrical EquipmentYes
Hochwald Foods GmbHGermanyErftstadtConsumer GoodsNo
Schoeller Werk GmbHGermanyEuskirchenSteel ProcessingNo
Sabic Polyolefine GmbHGermanyGelsenkirchenPetrochemicalsYes
SI Coatings GmbHGermanyWuppertalSteel ProcessingNo
Sinziger Mineralbrunnen GmbHGermanyBad NeuenahrConsumer GoodsNo
Arla Foods GmbHGermanyBitburg-PrümConsumer GoodsNo
Leoni Kerpen GmbHGermanyStolbergElectrical EquipmentYes
Coca-Cola EnterprisesBelgiumLiegeConsumer GoodsNo
Andreas Stihl GmbHGermanyBitburg-PrümIndustrial MachineryNo
Gerolsteiner GmbHGermanyVulkaneifelConsumer GoodsNo
Katimex Cielker GmbHGermanyVulkaneifelElectrical EquipmentNo
Pfeifer & Langen GmbHGermanyEuskirchenConsumer GoodsNo
Schmiedag GmbHGermanyHagenSteel ProcessingNo
Deutsche Edelstahlwerke Specialty Steels GmbHGermanyHagenSteel ProcessingNo
Lindenberg-Anlagen GmbHGermanyRheinisch-Bergischer KreisMechanical EngineeringYes
HME Copper Germany GmbHGermanyMärkischer KreisCopper ProcessingYes
Risse + Wilke Kaltband GmbHGermanyMärkischer KreisSteel ProcessingYes
H. D. Lenzen GmbHGermanyHagenSteel ProcessingYes
Peter Greven GmbHGermanyEuskirchenPetrochemicalsYes
Kabelwerk Eupen AGBelgiumLiegeElectrical EquipmentYes
Fibrant BVNetherlandsGeleenPetrochemicalsYes
Wieland-Werke AGGermanyMettmannCopper ProcessingNo
Sabic BVNetherlandsGeleenPetrochemicalsYes
Vinnolit GmbHGermanyErftstadtPetrochemicalsYes
Akro-Plastic GmbHGermanyBad NeuenahrPlastic CompoundsNo
Ecobat Technologies GmbHGermanyStolbergLead ProcessingYes
Dalli-Werke GmbHGermanyStolbergConsumer GoodsNo
Trivium Packaging GmbHGermanyErftstadtConsumer GoodsNo
Vinnolit GmbHGermanyErftstadtPetrochemicalsYes
ThyssenKrupp AGGermanyDuisburgSteel ProcessingYes
Galler ChocolatiersBelgiumLiegeConsumer GoodsNo
ZF Friedrichshafen AGGermanyBad NeuenahrAutomotiveNo
Radici Chemiefaser GmbHGermanyHofPetrochemicalsNo
Wikutec GmbHGermanyHofPlastic CompoundsNo
Härterei Kirchhoff GmbHGermanyMärkischer KreisMetal ProcessingNo
Superior Industries GmbHGermanyMärkischer KreisAutomotiveNo
AnQore  BVNetherlandsGeleenPetrochemicalsYes
Aurubis Stolberg GmbHGermanyStolbergCopper ProcessingYes
BWS Philipp Boecker + Wender Stahl GmbHGermanyHagenSteel ProcessingNo
GKN Sinter Metals Components GmbHGermanyOberbergischer KreisMetal ProcessingNo
ThyssenKrupp Bilstein GmbHGermanyHagenAutomotiveNo
ABC Umformtechnik GmbHGermanyEnnepe-Ruhr-KreisAutomotiveNo
Schmidt & Clemens GmbHGermanyOberbergischer KreisMetal ProcessingNo
Radium Lampenwerk GmbHGermanyOberbergischer KreisLightingNo
Albrecht JUNG GmbHGermanyMärkischer KreisElectrical EquipmentNo
Voss Fluid GmbHGermanyOberbergischer KreisMechanical EngineeringNo
GKN Sinter Metals GmbHGermanyOberbergischer KreisMetal ProcessingNo
Klingelnberg GmbHGermanyOberbergischer KreisMechanical EngineeringNo
SN Maschinenbau GmbHGermanyOberbergischer KreisIndustrial MachineryNo
Hesterberg & Söhne GmbHGermanyEnnepe-Ruhr-KreisAutomotiveNo
Huckenbeck GmbHGermanyEnnepe-Ruhr-KreisMetal ProcessingNo
Aug. Refflinghaus SöhneGermanyEnnepe-Ruhr-KreisIndustrial MachineryNo
Kind Materials GmbHGermanyOberbergischer KreisAerospaceNo
August Rüggeberg GmbH & Co. KGGermanyOberbergischer KreisMetal ProcessingNo
Voss Automotive GmbHGermanyOberbergischer KreisAutomotiveYes
Outokumpu Nirosta GmbHGermanyOberbergischer KreisSteel ProcessingNo
Hoffmann + Schelle GmbHGermanyOberbergischer KreisPackagingNo
Goldsaat Agrartechnik GmbHGermanyBitburg-PrümIndustrial MachineryNo
Neuhäuser Präzisionswerkzeuge GmbHGermanyBitburg-PrümMetal ProcessingNo
Hagener Feinstahl GmbHGermanyHagenSteel ProcessingYes
Schake GmbHGermanyHagenMetal ProcessingNo
Coca-Cola Erfrischungsgetränke AGGermanyBad NeuenahrConsumer GoodsNo
Corman SABelgiumLiegeConsumer GoodsNo
Cabot PlasticsBelgiumLiegePetrochemicalsNo
Trefimetaux SASFranceGrand EstCopper ProcessingNo
Randack GroupGermanyHagenMetal ProcessingNo
Saint-Gobain Building GlassGermanyStolbergConstruction MaterialsNo
AixTex Components GmbHGermanyStolbergElectric EquipmentNo
Brockhaus GroupGermanyMärkischer KreisSteel ProcessingNo
Urban Metallverarbeitung GmbHGermanyHagenMetal ProcessingNo
VDM Metals GroupGermanyMärkischer KreisMetal ProcessingNo
KMD GroupGermanyStolbergCopper ProcessingNo
Hermann Klincke J. H. Sohn GmbH+Co. KGGermanyMärkischer KreisMechanical EngineeringNo
DWL-WOLF GmbHGermanyMärkischer KreisMetal processingNo
MÄURER & WIRTZ GmbH & Co. KGGermanyStolbergConsumer GoodsNo
keeeper tableware GmbHGermanyEuskirchenConsumer GoodsNo
EBRO ARMATUREN Gebr. Bröer GmbHGermanyHagenMechanical EngineeringNo
Prym GroupGermanyStolbergAutomotiveNo
PFLITSCH GmbH & Co. KGGermanyOberbergischer KreisElectrical EquipmentNo
Dreherei Voeste GmbHGermanyEnnepe-Ruhr-KreisMetal ProcessingNo
Maschinenbau-Technik W. Dürbaum GmbHGermanyDürenIndustrial MachineryNo
FRANZ SCHÜRHOLZ GmbHGermanySoestMetal ProcessingNo
Duotherm Heiz- und Isoliersysteme GmbHGermanyEuskirchenIndustrial MachineryNo
Amco Plast GmbHGermanyHochsauerlandkreisPlastic CompoundsNo
Austrocel  GmbHAustriaSalzburgTextilesNo
Wilhelm Humpert GmbHGermanySoestMetal ProcessingNo
PolyTapes GmbHGermanySoestPackagingNo
Haribo GmbHGermanyBad NeuenahrConsumer GoodsNo

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