For entrepreneurs, shortage of inputs threatens to halt the recovery of the industry

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The lack of inputs and the high prices of raw materials threaten to jeopardize the recovery of the industry, after the period of social isolation and economic retraction caused by the covid-19.

Entrepreneurs report difficulties in acquiring items such as cardboard, plastic and steel, which has led some companies to delay deliveries or even refuse new orders. This scarcity also hit the prices of intermediate goods consumed by the sector: the estimate is for increases of up to 30% in recent months – with the risk of passing on to the consumer at retail.

This scenario appears in two different surveys commissioned by the National Confederation of Industry (CNI) and the Federation of Industries of the State of São Paulo (Fiesp). In the first case, 1,855 companies from 27 sectors were heard, between 1st and 14th of this month. The Fiesp survey brought together 414 companies, between the 7th and the 13th.

The CNI survey shows that 68% of entrepreneurs already find it difficult to purchase materials used in production on the domestic market. Importing these inputs, which could be a way out, is also complicated for 56% of the factories. Still according to the survey, 82% of the industries are paying more for raw materials than before the crisis. For 31% of them, the increase in values ​​is “marked”.

The result of the Fiesp poll goes in the same direction. Of those consulted, 59.5% report difficulties, for example, to buy cardboard. And whoever finds it has to pay up to 30% more than before the crisis. In the case of steel, the shortage is greater and affects 67% of respondents.

When the new coronavirus arrived in the country in March, and forced states and municipalities to enact strict measures of social distance, there was a consequent reduction in activity in several production chains, which began to consume stocks in the following months at a pace sufficient to meet the reduced demand for the period.

Now, with a resumption of the economy at a faster pace than expected, the industry faced suppliers with structures still demobilized or very low inventories, below the new demand for production in the factories.

There is also the problem of the devaluation of the real against the dollar, which made the price of imported inputs or even national items more expensive, whose prices are referenced by the American currency.

“The $ 1 million question is what is the new demand after the withdrawal of stimuli (given by the government to reverse the decline in economic activity). Now, regardless of demand, we have a cost shock, ”says André Rebelo, economist and advisor on strategic issues at Fiesp.

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