Rising prices of certain materials, delays in delivery… Some effects of the conflict in the Middle East are perceptible for many Asian manufacturers present at the Global Industrie show, but most are reassuring about their activity, hoping for a rapid resolution.
“Our factory is 30 km from Mecca, it’s a safe place”: the Saudi cable manufacturer Bahra Electric is the only Gulf industrialist present at the Global Industrie trade show, which is being held until Thursday in Villepinte in the Paris suburbs.
Its vice-president in charge of projects and export, Tamim Mustafa Burghul, assures AFP that the conflict in the region does not disrupt the activity of the company, which exports to around fifty countries and whose production activities are located halfway between Mecca and Jeddah, Red Sea side.
“There may be some raw materials arriving at the factory with additional costs, but we can cope and we have not had to send a letter of apology to our customers for the slightest delay,” explains the manager, who traveled near Paris to look for new customers and distributors for his production electrical equipment.
The attack on Iran by Israel and the United States has repercussions on the supply chains of basic components of the industry, particularly noticeable for Asian countries, more dependent on hydrocarbons which usually pass through the Strait of Hormuz.
“In our industry, we use a lot of plastic and metals,” and the situation in the Middle East “has an impact on their purchasing prices,” Sonya Huang, of the Taiwanese company Chang Way Industries, explains to AFP.
Created in 1972, this manufacturer of computer connectors is particularly affected by fluctuations in the price of plastic, “which requires oil for its manufacture”, and of galvanization, a process consisting of protecting metal components against corrosion “whose costs have increased enormously increased in Taiwan.
Another difficulty: the supply of naphtha, resulting from oil refining. “It is more difficult to obtain packaging plastics,” says Ms. Huang, who assures that her customers are understanding if there are price increases to be made.
Pending Activities
Another Asian industrialist confirms, having asked not to be cited by name, “difficulties in obtaining what is derived from naphtha, which drives prices upwards”.
Brass specialist, Indian metallurgist Ashwani Metals has had to put some of its highly energy-consuming activities on hold, such as the foundry.
“The Indian government has prioritized the domestic uses of liquefied gas (LNG)†, widely used for cooking for example, explains K. Nagaraj, general director of the company created in 1963. “It is only if there is a surplus available that it can be used by industry.”
Its production is working “at around 80%”, he explains, warning that there may be “two to four weeks of delay in deliveries to Europe” due to difficulties in transport.
“But we are not increasing our prices because the price of gas has not changed, it is a supply issue. And then, our customers are not always eager to give us more!”, smiles the mustachioed manager, hoping for a rapid resolution of the conflict.
A few stands further away, Neo Niu assures AFP that he only feels a “very slight” impact on the activity of his company, STT Bearings.
“Transport prices have increased but the products we ship are very light,” explains the young Chinese, showing the tiny ball bearings he produces in Suzhou, near Shanghai. “As a result, this does not impact our costs.”
The production of tiny parts used in drones, electric vehicles, air conditioners or data centers is not affected by fluctuations in the price of hydrocarbons, because it is done using electricity.
“We have many sources of supply in electricity, water, wind, sun, nuclear power”, lists the Chinese present in Paris to look for distributors in France for his products. “So we don’t depend on oil.”
