Orders and profit margin at local manufacturers are under pressure as a COVID-19 outbreak is helping to push raw material prices and shipping rates to unbearable levels, a Chinese National Federation of Industries (全國工業總會) survey released yesterday showed.
The Taipei-based trade federation said that it polled member companies from May 28 to Wednesday last week, with 65.53 percent of respondents saying that orders declined and 63.58 percent reporting profit erosion since the outbreak began.
The survey results are bleak compared with Ministry of Economic Affairs data that showed export orders in April soared 33.9 percent from a month earlier to US$54.93 billion.
Photo: Lee Ya-wen, Taipei Times
Export orders are an indicator of actual exports in the following one to three months.
“Manufacturers named business orders and profit declines as the most serious challenges they face, despite clear order visibility in the previous six months,” the survey said, adding that it remains to be seen if the downturn will be short-lived or a fundamental change.
Retreats in business orders and profit usually go hand-in-hand, but many firms are blaming profit erosion on incessant rises in raw material prices and shipping costs over the past one-and-a-half-years, it said.
Costs for pig iron rose 8 percent, printed pamphlets soared 30 percent and paper cartons increased 35 percent, the federation said.
Customers at home and abroad have turned cautious about placing orders after virus infections escalated in Taiwan, it said, citing manufacturers of information and communications devices as an example.
Local textile suppliers are facing a slowdown in business before they have emerged from the pains of the COVID-19 pandemic in Europe and the US, the federation said.
Only a few companies said that they have not been affected by the domestic outbreak, because they supply raw materials and have increased prices, the survey said.
A packaging company said in the survey that although its business is showing resilience, it is worried that rising costs would squeeze its margin, a situation worsened by persistent appreciation of the New Taiwan dollar, as well as container and labor shortages.
The packaging company said that peers in other sectors have similar problems.
Production disruptions were the second-largest concern for manufacturers, after seeing a temporary shutdown at IC testing service provider King Yuan Electronics Co (京元電子), the survey said.
The worry is most evident at science parks, where 80 percent of companies share such misgivings, it said.
The federation called on the government to accelerate vaccinations, cut business taxes and make manufacturers eligible for wage subsidy programs as service providers.
Most of Taiwan’s small and medium-sized manufacturers did not benefit from a boom in demand for devices used in remote working and schooling, it said.
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