Given the terrible war now raging in Ukraine and its enormous impact on the population, the economic and personal consequences for the Netherlands are relatively limited. We have sufficient water, food and our houses are still well heated. Nevertheless, Dutch citizens and Dutch companies will also be increasingly affected. Below we focus on the consequences for a number of entrepreneurs.
In the previous year, various trade chains were already disrupted by COVID and the temporary blockade of the Suez Canal. This in turn had the effect of overloading various ports. In turn, the resulting scarcity of certain goods caused inflation. This was followed by higher energy prices.
After the outbreak of the war in Ukraine, the negative trend has intensified. Energy prices continue to shoot up, as do the prices of raw materials, and this in turn leads to a further increase in inflation. As if this were not enough, companies will also be affected by the reduction in support measures, payment of deferred tax liabilities and interest rate increases.
Data from the CBS show that agriculture and fisheries, industry and health and welfare are the main consumers of gas and electricity. We have already read about agriculture and fisheries in the media.
The above was reason for us to contact a number of our relations in various sectors. We spoke to a builder who indicated that he was dealing with (very) long delivery times, a sharp increase in concrete prices and an extreme increase in steel prices. Some of these costs can be passed on to the client, and agreements can sometimes be made with long-term clients whereby there is a bit of give and take. This keeps the increase in cost price within limits and the work can still go ahead.
We also contacted an international wholesaler in the food industry who also reported longer delivery times and a sharp increase in the price of raw materials. In the market in question, it is still possible to pass on these increases, although a few customers opt for a cheaper product elsewhere.
Furthermore, we also hear from various quarters that energy and raw materials suppliers are breaking open contracts with large consumers without consultation; it is then a matter of choosing or sharing as litigation against such parties is time-consuming and costly.
Of an entirely different order are the problems of a company in the medical sector that saw demand for its products fall by 40-60%. In order to save on costs, a considerable number of employees were made redundant, who are difficult to get back on the labour market. This entrepreneur has found a private provider of capital willing to invest, thus ensuring its survival for the time being.
Finally, we spoke to an entrepreneur who exports capital goods to Russia, among other countries, and is now affected by the sanctions. This means no new orders, no delivery of finished products and possible non-payment of outstanding invoices. They immediately intensified marketing efforts in other markets which quickly produced results.
Although there seems to be little time left, entrepreneurs do well to take action where possible. What can be done to reduce risks?
More information and contact details
If the above problem seems (partly) familiar to you, we would like to invite you for an informal talk. You can contact us for this purpose.
Ronald van Rijn