Earnings in Manufacturing Dragged Down by Recession
Franz R. Hahn
In 1993, Austria's manufacturing suffered its most severe cyclical setback since the beginning of the eighties. All branches incurred great losses in earnings. The cash-flow rate in manufacturing was 22 percent, markedly below the long-term average. The basic goods sector was hit the hardest. Losses were relatively modest in those sectors which benefited from the boom in the construction industry and the hefty demand for consumer goods. In 1993, profitability in Austria's manufacturing sector fell to its lowest level since the beginning of the eighties. The cash-flow rate (cash-flow as a percentage of value-added) was 22 percent below the average of the last decade (25 percent). The economic slump hit all branches, but those which were able to benefit from the growth in consumer expenditures and the boom in construction recorded the smallest losses. The basic goods sector experienced the greatest setback. The crisis in this sector was exacerbated by the turbulence in the European Monetary System and the increased competition from the countries in Eastern Europe. The deep recession and its ramifications (e. g., the financial disturbances) exposed not only the state-owned basic goods industry but also many private enterprises to a serious crisis. The cash-flow rate in the basic goods sector plunged to 18 percent in 1993, the lowest level since the beginning of the eighties. The global recession and the concomitant restraint in investment in Austria as well as abroad also pulled the processing industries into a recession. Other factors were the upheavals in the financial markets, the deep slump in the German automobile industry, and structural weaknesses. The cash-flow rate sank from 30 percent in 1992 to 27 percent in 1993. Within this sector the earnings development varied: the machinery and transport vehicle industry were more seriously affected, the electric equipment industry less. The situation in the chemical industry deteriorated further in 1993. Austrian firms were fully exposed to the effects of the global slump in this sector. Producers of basic chemicals and consumer goods were also hurt by the emerging competition from the Eastern countries. The cash-flow rate dropped to 26 percent, the lowest rate since 1985. Profitability suffered relatively little in those branches that were propped up by the construction boom and the vigorous demand for consumer goods. Firms producing construction materials and traditional consumer goods fared relatively well, only slightly worse than in the long term. The cash-flow rate of branches producing construction materials declined from 31 percent in 1992 to 29.5 percent in 1993, from 29 percent to 27 percent in the consumer goods sector.
Erträge der Industrie von der Rezession erfaßt. Entwicklung des Cash-flows der österreichischen Industrie 1993; Earnings in Manufacturing Dragged Down by Recession
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