Severe Floods Across Western Europe Disrupt Manufacturing Operations in Key Industrial Areas

Severe Floods Across Western Europe Disrupt Manufacturing Operations in Key Industrial Areas

Figure 1: Districts (red) and cities (black) with most severe impact on industrial areas and manufacturing facilities in Belgium, Luxembourg, and Germany.
Source: Everstream Analytics

Severe flooding caused by violent storms have resulted in widespread disruption to logistics and manufacturing operations over the past few days in Western Europe, including in Belgium, Luxembourg, parts of the Netherlands, and western Germany. At least 160 people have died as entire villages were severely damaged, with dozens of highways and roads still closed due to debris and floodwater. 

The rapidly rising river levels caught authorities by surprise and started to impact residents and companies overnight from July 14 to July 15, in particular along the Meuse/Maas, Ahr, Inn, Mosel, Ruhr, and Rhine rivers or its smaller tributaries. The storms and subsequent high water also affected parts of southern Germany, Austria, and Switzerland into July 18, with some of the affected areas receiving the equivalent of a month’s worth of rain in a single day. 

The flooding in the German states of North Rhine-Westphalia, the country’s richest state by Gross Domestic Product (GDP), and Rhineland-Palatinate, an economic powerhouse comparable to the size of Hungary, represents some of the worst in decades, after several days of steady rain generated more water than what ground and sewage systems could absorb.

Dozens of areas remained without power, telephone, or cellphone networks on July 18, contributing to widespread impacts on logistics and manufacturing activities in an area that roughly spanned from Liege in Belgium via Maastricht in the Netherlands to the Sauerland region east of Cologne in Germany. Several industrial areas and companies located on the overflowing river banks were forced to evacuate and shut down operations due to floodwater entering their premises.

As floodwater started to recede, most major highways and roads were expected to be cleared over the past weekend; however, due to the extent of water damages in some affected industrial areas, manufacturing operations are unlikely to resume as quickly, potentially impacting supply availability. Given that some companies have already issued profit warnings and even declared force majeure, the effects of the flooding will likely continue to ripple through supply chains for several weeks to come.

Affected industrial areas host highly specialized suppliers

While dozens of highways and roads were intermittently blocked between July 14-18, disrupting transportation on key highways that included the A1 near Leverkusen and Cologne, the A2 near Maastricht, the A44 near Dusseldorf, the E313 near Lummen, and the A61 near Kerpen, most of the closures were expected to be lifted over the weekend and several alternative routes exist in the dense highway network between Liege, Maastricht, and Cologne that should limit the impact on transportation flows in the region. The most severe effects on road logistics should be expected from extended highway closures on the A1 near Cologne and the A61 near Kerpen that could last several months due to partial collapses and complex damage assessments. 

However, the brunt of the impacts should be expected from floodwater damages at manufacturing facilities in the most severely affected districts and cities in the Netherlands, Luxemburg, Belgium, and Germany, some of which host industrial zones with dozens of high-precision manufacturing suppliers that provide specialized parts for the automotive, aerospace, technology, and mechanical engineering sectors. 

While information remains scarce regarding which industrial areas have been worst hit by the flooding, an original analysis by Everstream Analytics that assessed company statements, media reports, as well as the proximity to severely flooded areas and/or overflown rivers revealed that companies located in a number of industrial areas in eastern Belgium, Luxembourg, and western Germany appeared to be at the greatest risk of experiencing longer term disruptions (see Figure 4). 

Figure 2: Live Incidents on affected suppliers along the Wupper River in the Everstream Analytics solution as of July 18

Several companies in the most severely affected industrial areas have been inundated by floodwater that caused extensive damage to machinery, production facilities, and warehouses, forcing some to halt operations and immediately declare force majeure on deliveries or issue profit warnings.

Some of the worst hit  manufacturing facilities were reportedly located in the Oberbergischer Kreis along the Wupper River, where numerous companies supplying customers in the aerospace, mechanical engineering, and automotive industries are based. As soon as the Wupper overflowed its banks on July 14, reports of affected companies in the industrial areas of Hueckeswagen, Wipperfuerth, and Radevormwald (as shown in Figure 2) started to emerge. For instance, the Hueckeswagen plant of Klingelnberg GmbH, which makes precision components for automotive, railway, aerospace, and heavy industries customers, was almost entirely flooded overnight on July 14, shutting down access to the site and prompting the company to issue a warning that the damages may impact its revenue targets for 2021. 

CITY/DISTRICTCOUNTRYINDUSTRIAL AREAS AFFECTEDCOMPANIES AFFECTED
LIEGE/VERVIERSBelgiumZone industrielle de Herstal 
ECHTERNACHLuxemburgIndustriezone Echternach 
AACHEN-STOLBERGGermanyGewerbegebiet Steinfurt, Industriegebiet HammerbergAurubis Stolberg GmbH
OBERBERGISCHER KREISGermanyIndustriepark Kaiserau; Industriegebiet Mermbach; Gewerbegebiet Ost + West 2 – Hückeswagen; Industriegebiet Wipperfürth; Industriegebiet Krebsöge; Industriegebiet West – Gevelsberg; Gewerbegiet Engelskirchen-EhrenhovenSchmidt & Clemens GmbH; Kind Materials GmbH;  Radium Lampenwerk GmbH; Voss Fluid GmbH; SM Maschinenbau; GKN Sinter Metals, Klingelnberg GmbH
HAGEN-ISERLOHNGermanyIndustriegebiet HohenlimburgBWS Philipp Boecker + Wender Stahl GmbH
EUSKIRCHENGermanyIndustriegebiet Weilerswist 
MÄRKISCHER KREISGermanyIndustriegebiet Altena; Industriegebiet Werdohl; Gewerbegebiet Schalksmühle-StrückenAlbrecht Jung GmbH; Superior Industries; Härterei Kirchhoff
Figure 3: List of industrial areas and companies affected by the flooding in Western Europe. Source: Everstream Analytics

Among other equally hard hit industrial areas with strong manufacturing presences were those in Stolberg near Aachen along the Vicht River, and those in Hagen and Werdohl along the Lenne River. In Stolberg, for instance, Aurubis GmbH – a supplier of high-precision copper wires for the electronics, electrical equipment, and mechanical engineering sectors – declared force majeure on deliveries following extensive flooding at its plant which is unlikely to resume normal operations in the near future due to significant damages. As cleanup and rescue efforts continue this week, with debris and floodwater being cleared from roads and company premises, the full extent of the damages is likely to become even clearer and more affected companies are expected to issue notices on severe damages,  impacts on production, and delays in delivery schedules to their customers. 

Figure 4: Manufacturing and supplier locations in the automotive and mechanical engineering industries along the Wupper River and its surroundings. Source: Everstream Analytics

More rainfall and flooding possible as weather system moves in southeastern direction

As the weather forecast for most of the affected regions predicted drier weather for the upcoming week, water levels on most of the overflowing rivers in western Europe have gradually started to fall, including on the Rhine, Mosel, and Meuse/Maas rivers. As a precautionary measure though, authorities in Germany temporarily halted river shipping on a section of the Rhine near Koblenz on July 16 due to water levels exceeding the critical 6.50 meter mark; however, barge movements were expected to resume at the beginning of the week as water levels decreased to less than 6 meters on July 18. 

With the slow-moving weather system moving in southeastern direction, heavy rainfall has also led to significant flooding on the Inn river and its tributaries in parts of southeastern Germany and western Austria on July 17 and 18, including in Berchtesgadener Land and Salzburg. As authorities declared a state of emergency, additional rainfall was said to be possible overnight into July 19, potentially causing further disruption in the areas. Impacts on roadway infrastructure and industrial facilities remained unclear at the time of writing.

According to Everstream Analytics’ in-house Applied Meteorology team, rains are expected to return over the coming weekend, and continue into next week. Based on the most recent guidance, the heaviest rains will be positioned further south — centered over the Alps around Switzerland, southern Germany, Austria, and northern Italy. The areas around Germany, Belgium, and the Netherlands is also expected to receive some rain during the coming weekend; while the amounts will not be as extensive as last week, or equivalent to the ones forecasted over the Alps, it will likely impede some of the clean-up efforts in the already inundated areas. 

The devastation caused by the severe floods in western Europe underlines the changing environmental and geological realities that supply chain managers will face going forward as weather forecasts and national disaster prevention systems struggled to accurately predict the extreme danger the dayslong rainfall represented for the affected areas. 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 identify which of their sub-tier suppliers may be impacted  and establish a clear channel of communication to receive a more realistic picture of impacts on production schedules, inventory levels, and potential delivery delays. 
  • Identify alternative sources: To mitigate potential delivery delays and supply shortages, organizations are encouraged to concentrate on finding alternative sources for the most critical components, i.e., those with the highest impact on revenue, from other geographic locations and/or suppliers and arrange emergency air freight if necessary to prevent stock-outs and operational downtime. 
  • Monitor weather events and map out supplier networks: To reduce crisis response times, companies should also consider investing in technological solutions capable of mapping out supplier networks and providing greater end-to-end visibility. This includes mapping supplier networks beyond Tier 1 that can support supply chain managers to understand new patterns emerging around external risks such as flooding and other natural disasters. 

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