What is to be done now? In a statement, Michael Stiehl, acting president of the Association of the German Furniture Industry, explains where he currently sees a need for action, also in politics.
Mar 30 2020
Statement by Michael Stiehl, Acting President of the Association of the German Furniture Industry (VDM)
"For one and a half weeks now, the furniture trade in Germany and in important European sales markets has been closed, brutally cutting off the furniture industry's central sales channel. Even if our manufacturers are still able to deliver in large parts, the economic situation in the industry will drastically intensify in the coming weeks.
Since no one can currently predict how long this shutdown will last, it is now essential for the entire industry to secure liquidity. This applies equally to industry and trade. Against this serious background, partnership and solidarity are now called for. The necessary safeguarding of our own liquidity must not be carried out on the back of the other side of the market. Contracts must be honored even during the crisis. Unilateral cancellations of orders, extensions of payment terms or additional conditions undermine the necessary relationship of trust and damage the industry.
After all, industry and trade work together to produce the products that shape and embellish people's private retreat in a rough and confusing world. This is a value that we should jointly focus on in view of the post-crisis period."
In the political arena, VDM and HDH, the umbrella organization of the German wood industry, advocate the following:
Additional cover for trade credit insurance
As in the 2008/2009 financial crisis, the current government aid to support the economy should include a top-up model with government guarantees if private credit insurers are no longer able to cover part of the risk of bad debts due to the crisis.
Such state cover for reinsurers provides appropriate financial security for both trade and the supplying industry, irrespective of the sector, and can help to keep the flow of goods currently still functioning in many places.
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