Posts Tagged SMEs
Mittelstand plans increases in plant investments
June 10th, 2013 | Thema: News
According to the results of a CAPEX report established by GE Capital, the German Mittelstand wants to spend around 164 billion euros on IT and plant investments in the coming 12 months. Thus investment planning is around 60 per cent above the previous year’s level. Machinery is in first place in the Mittelstand’s investment budget: planned investment volumes amount to 76.5 billion euros. About one third of companies want to expand their capacities in this way to create space for new orders. About 23 per cent of those surveyed are acquiring plant to launch new products on the market.
But the German Mittelstand is not only investing in machinery but also in people: about 12 per cent of companies are spending money on acquiring skilled labour and 48 per cent of the companies surveyed want to increase staffing levels. If the course of investments goes to plan around 986,000 new jobs would thus be created in the coming twelve months.
Employment in SMEs also stable in times of crisis
April 29th, 2013 | Thema: News
Employment in small and medium-sized enterprises (SME) in Germany also remains stable in times of crisis. This is the result of a current study by the Bonn Institut für Mittelstandsforschung (IfM, or Institute of SME Research) on employment in Mittelstand export companies, for which the researchers have evaluated official statistics for the years 2001 to 2009. Accordingly, the number of employees at all SMEs in Germany grew by 13.6 per cent between 2001 and 2009 – and even by 2.9 per cent in the crisis years 2008/09. In comparison: large companies reduced their employment by around 2.3 per cent in these two difficult economic years.
The IfM results also prove that SMEs – and niche providers above all – compensate for fluctuations in demand on domestic markets with export activities, thus stabilising employment. It is, however, large Mittelstand companies that are primarily active on foreign markets. In the IfM’s opinion this also confirms the basic assumption that tapping new markets contributes to reducing costs – and is thus interesting for companies above a certain size.
Weaker business situation but higher sales expected
April 22nd, 2013 | Thema: News
Just over half – 50.4 per cent – of small and medium sized enterprises in Germany assess their business situation as good or very good. This is the result of the Spring 2013 Creditreform survey on the economic situation and financing in the Mittelstand. One year ago it was even more at 58.6 per cent. In contrast, the proportion of companies expecting increasing sales has remained almost the same: it rose slightly from 37.6 to 38.6 per cent.
The balance of good and poor assessments of the business situations totals plus 47.1 points. This is the third highest level in the past ten years. In the good marks service companies lead the sector field with 55.3 per cent. In retail only 45 per cent of companies gave a good mark. Sales rose at a good fifth of SMEs; last year this was only the case at a quarter. In contrast, 28.6 per cent recorded a decline.
Capital resources in the German Mittelstand have also developed positively: for the first time in the Creditreform survey the proportion of companies with an equity ratio of more than 30 per cent of the balance sheet total was higher than the proportion of businesses with an equity ratio of below 10 per cent – 32.8 compared to 28.3 per cent. In manufacturing industry 40.7 per cent of businesses have an equity ratio of more than 30 per cent. In the construction sector, which traditionally tends to be weak in equity, there has been considerable growth from 15.2 to 20.7 per cent.
Low interest rates bring future burdens for the Mittelstand
April 8th, 2013 | Thema: News
The Deutsche Industrie- und Handelskammertag (DIHK, or Association of German Chambers of Industry and Commerce) has warned of the negative consequences of the policy of low interest rates, particularly for the Mittelstand (small and medium-sized enterprises) in Germany. In an interview with the Handelsblatt business newspaper, the chief economist of the DIHK, Alexander Schumann, described low interest rates as a “Trojan horse”. Currently, advantages were seen on the credit side, but no thought had been given to the future burdens caused by low income, for pension provisions, for example. According to DIHK calculations, a funding gap of 4.1 billion euros has emerged in pension provisions in the German Mittelstand.
As a counter strategy the DIHK expert points out companies could either form more provisions today or finance later pension payments from profits. Both would restrict investment scope, although at different times. The DIHK calls for companies to put financing alternatives into place and for politicians to create more transparent rules for the venture capital market.
Continued high equity ratio in German Mittelstand
January 21st, 2013 | Thema: News
The balance sheets of small and medium sized enterprises in Germany are currently demonstrating high quality. This is the result of an evaluation of more than 80,000 balance sheets of small and medium sized companies by the University of Münster in 2011. The study was prepared on behalf of the Central Bank of the Volksbanken and Raiffeisenbanken in the Rhineland and in Westphalia, the WGZ BANK. According to the results, although the continual improvement in the equity base seen for several years did not carry on in 2011, the equity ratio of 30.3 per cent remained at a high level.
While the equity ratio was only at 17.4 per cent in 2002, the thirty per cent mark was exceeded for the first time in 2010 at 31.2 per cent. The slight decline in 2011 is attributable to balance sheet expansions as a result of externally financed investments. 2nd degree liquidity also fell. Nevertheless, both key performance indicators remain at a constantly high level. Furthermore, the experts identified that total capital turnover, the dynamic debt-equity ratio and the total return on investment were optimised.