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This news article was originally written in Spanish. It has been automatically translated for your convenience. Reasonable efforts have been made to provide an accurate translation, however, no automated translation is perfect nor is it intended to replace a human translator. The original article in Spanish can be viewed at ¿Cuál ha sido el impacto de la crisis económica global en la industria británica del metal?
The Atradius Group unveils the situation of the metalworking industry and the automotive industry in this country

What has been the impact of the global economic crisis in the British metal industry?

Drafting Interempresas17/04/2009
The global crisis has affected massively to the metal in the United Kingdom sector. The three sectors that consume the largest share of the United Kingdom steel are construction (30%), general engineering (25%) and automotive (15%). The three are undergoing a substantial reduction in its activity, with collapse of production in the construction of the United Kingdom of 6.4% in the last quarter of 2008, anticipating a deterioration in the first quarter; fall of the industrial production of the United Kingdom of 2.4% in January, despite the weakness of the pound, and sharp drop of 59% annual in enrolment until February. These data arise from the report on the month of April by the Atradius group, which operates in Spain, Portugal and Brazil through credit and suretyship.

The situation in the aluminum industry is even worse, as the automotive industry is even more crucial for its future. In particular, the secondary aluminium smelters have suffered a serious blow due to the combination of weak demand for the end user and the high costs of production with regard to prices of scrap and energy.

What is the current trend in delinquency, default and insolvency?

There has been a significant increase of delinquency and postponement of payment, which affects the number of proposals for the renegotiation of payments received. Even the companies that were earlier considered to be 'strong' have experienced a severe reduction in its position of circulating due to the deterioration in their working capital. Bankruptcies are soaring, as it could be expected, given the weakness of the consumer market.

What they should be fixed in particular companies that sell products to the metal sector?

Taking into account the strength of markets until September 2008, audited financial statements for the past 12 months are virtually superfluous as they show, in all cases, a good behavior. The companies that sell to the metal of the United Kingdom sector should focus on obtaining up-to-date management accounts to assess the recent financial behavior, rather than the historical.

In addition to the financial situation, it is necessary to look at the strength of the management. Many family businesses can be controlled by a generation which has only experienced economic growth. The inability to adapt to difficult economic conditions will lead undoubtedly to the collapse of some companies.

What is the perspective in the short term for the sector?

Extremely negative. There is little prospect of improvement in this sector until at least early 2010, and therefore the short-term perspective is bleak.

We anticipate that further increasing bankruptcies before the situation is stabilised towards the latter part of the year.

What has been the impact of the global economic crisis in the automotive sector?

The providers of the sector of manufacturers of original equipment (OEM) have been seriously affected by the crisis. It seems that the main OEM were too slow to react to the economic crisis and only began to cut back production in the United Kingdom around Christmas, which has caused a serious excess of vehicles on the market. The after-sales market is behaving better, as consumers affected by the recession are opting to keep their current vehicle instead of changing it by one senior or buy a new car.

What is the current trend in delinquency, default and insolvency?

Due to the excess of vehicles, manufacturers tend to extend deadlines and reduce inventory. The most important dealers are cutting costs to cope with the crisis, and it seems that, for the moment, the measure is producing results. However, some smaller dealerships already have been left on the track.

What they should be fixed in particular companies that sell products to the automotive industry?

It is important that companies are aware of the effect of the crisis on its customers and suppliers.

Some car manufacturers are already carrying out reductions of template or day, and the budgets and forecasts for 2009 must adjust accordingly.

What is the perspective in the short term for the sector?

There is no real indication that the prospect will improve in the next six months. We will have the first indicator in United Kingdom when doing public figures for new registrations from March, which usually account for 18% of annual sales.

In the first two months of 2009, sales of new cars fell by 28.2%. What happens to the three major manufacturers in United States, with the forecast of important events in the coming months, will also have an impact.

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