The great current concern of SMEs in the Valencian Community -also in Spain- it is the increase in the cost of raw materials. This is reflected in the latest report by the consulting firm Tactio, in which 46% of the participating Valencian companies displace the collection difficulty to second place in headaches, an aspect that 50% of the entities of Alicante, Valencia and Castellón had chosen as the main fear in the last survey carried out during the first months of the covid crisis.
There are 373 companies that have now participated in this new edition of the study at the national level. And despite the fact that the region and the whole of Spain share the first place in the ranking (Tactiometer) of concerns, the difference in the results is remarkably large. While for the national territory the concern of the rise in raw materials represents 18%, this same value is 46% in the Valencian Community.
The Valencian Community is, of all Spain, the one that reflects a greater fear due to the evolution of the price of raw materials. A concern that is followed by collection difficulties (11.6%), an aspect that did not even enter the top of the tactometer before the covid, but which in April 2020 topped the ranking; the lack of financing (11.6%); the difficulty in hiring (7.7%), which has been shaking several sectors, with great energy, for example, in the case of the hotelier; competition (3.9%) -at the national level is the second concern-; and the internal organization (3.9%).
To understand the strong change in the order of concerns of Valencian companies, the consultant’s report highlights the importance of taking into account the current context of inflation and the supply deficit of some materials, as well as the delays and delays of freight ships caused by the obstruction of the Ever Given freighter, which occurred a few days before the survey that supports these data was carried out, and which took place between April and May 2021. In In recent months, raw materials such as copper, aluminum or plastic, among others, have experienced very strong increases.
The recovery of SMEs
In Spain we have more than 3.4 million companies, of which 99.86% are SMEs (between 0 and 249 workers), as collected by Tactio from the latest data from the Ministry of Industry, Commerce and Tourism. The remaining 0.14% are large companies. According to data from the Central Business Directory (DIRCE), updated in March 2021, The Valencian Community groups together 10.9% of the SMEs and micro-SMEs in Spain.
The current situation for most of them is really complicated. The health crisis incorporates very strong changes in social development that have a direct impact on the economy, and new ones are also added to these. 35.5% of the companies that have participated in the study, already speaking at the national level, consider that we are experiencing a situation of slight recovery. This represents more than a third of the surveyed entities and more than triple compared to the last edition of the study, in April 2020. 26.8% think that they are in a process or situation of stagnation, and 17.5 % consider that we are in a slight recession.
The big question is what is: When will it be time to “pull” up? The difference in answers is quite large. Several leaders place the beginning of this process at the end of this year, although the majority, 30% of the companies that have participated in the survey, believe that the economic recovery will begin in the first half of 2022. A 13 ‘6% jumps straight to 2023.
The study sees a clear difference in obtaining data: the larger the entity, the greater the perception current recovery of the company’s activity.
Innovation and digitization
Internal expenditure on R&D is 1.2% in Spain of GDP and the equivalent full-time personnel in R&D in our country is 11.4%. Two data that are well below the European Union average for similar indicators, according to Tactio. The Regional Innovation Scoreboard (RIS), prepared by the European Commission and comparing data from 238 regions, places Spain “in a very modest position,” says Tactio in the study. The first Spanish region to appear is Euskadi, in position 132; the Valencian Community is the fifth, at 157.
Digital transformation escalates concerns. In 2019, the leaders of the companies placed this issue among the least worrisome with 3.7%, a percentage that was decreasing until in the April 2020 study it barely had a presence.
On this occasion, this change to digital reaches 6.6% in the evolution of the concerns of SMEs, according to the Tactiometer. It is the highest position in Spain since this study was carried out. The covid has forced the implementation of teleworking, which have welcomed 47.7% of the entities, and the commitment to improving the website, carried out by 45.1% of the companies.
“Prices no longer support the increase in raw materials”
The business world warns of the narrowing of margins in recent months
Concern over rising raw material costs is the one causing the most concern among SME leaders in the Community. This is how Tactio collects it in its study and is also corroborated by company representatives in different sectors.
The Business Confederation of the Valencian Community (CEV) has been warning in recent months of the narrowing of margins that this rise in the price of raw materials and other costs is causing. Salvador Navarro, president of CEV, lists three main reasons why this situation is occurring: the rising oil, electricity and measures targeting China and shipping costs. “These increases are impossible to pass on to the consumer, so they will be absorbed by companies,” explains Navarro.
“All this increase in costs is passed on throughout the value chain, to the point that contracts already closed cannot be fulfilled», Explains Luis Rodríguez, general secretary of the Federation of Metal Entrepreneurs of the Province of Alicante (FEMPA). “The expectations of a good summer are being blurred,” adds Rodríguez, who is looking at the month of September. The secretary explains that the trend of sector uncertainty It won’t change until the end of 2021.
“Much of the concern is the increased costs and shortages. In addition to causing concern, it is creating unemployment, ”says Héctor Torrente, director of IBIAE, the Ibi and Comarca Business Association. “Plastic was at € 0.95 per kilo, now it is between € 1.80 and € 2,” says Torrente as an example of the increase in raw materials.
The president of the Valencian Association of Footwear Entrepreneurs (Avecal), Marián Cano, points out that the sector she represents “is at a critical moment.” “We are seeing that consumption is reactivated, but with prices that have a margin that can no longer support the increase in raw materials,” explains Cano.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.