During the global financial crisis insolvencies of all types of businesses increased by almost 35% (led predominantly in North America and Western Europe). Tier 1 suppliers to the German automotive industry were especially impacted with orders drying up, competition from lower-cost sourcing countries, and the years of price cuts and concessions taking their toll.
Fast forward to 2021 - we have seen a deeper impact on production (Figure 1 below) than during the financial crisis, followed by further volatility in production demand, yet bankruptcies have remained surprisingly low as shown in Figure 2. This is a direct result of state aid and furlough protections provided around insolvency filing.
So, why is this relevant?
