Continuously rising operating costs are causing financial strain for four in 10 small manufacturers in Thessaloniki. At the same time, nine in 10 say their liquidity to cover day-to-day operating needs is inadequate or borderline, while seven in 10 say their available funds will last for up to three months. Meanwhile, four in 10 avoid applying for bank financing for fear of rejection or the high cost of borrowing.
The figures come from the VETH two-month Economic Barometer for September-October, conducted by polling firm Interview among a sample of 405 member businesses.
Asked, “How adequate is your business’s liquidity to cover day-to-day operating needs (raw materials, rent, etc.)?”, 29% said it was inadequate, 60% borderline and 11% excellent. Asked how long their liquidity would last, 13% said more than six months and 14% said four to six months, while the largest share, 73%, said one to three months.
Causes of financial strain
For 44%, the main cause of financial strain for small manufacturers is the continuous rise in operating costs (energy, raw materials, transport, etc.). Accumulated tax and social security obligations followed at 24%, a fall in sales volumes at 20%, late payments from customers at 10% and the high cost of servicing existing loans at 2%.
Asked which obligations they were delaying because of insufficient liquidity, most participants (42%) cited payments to raw material suppliers. A further 24% said they were delaying tax obligations and social security contributions, 9% staff payroll and 6% instalments on bank loans, while 19% answered “none”.
Attitudes towards banks
Asked whether they had applied for bank financing for working capital in the past year, 5% said their application had been approved in full and 6% that it had been approved for a smaller amount. By contrast, 11% said their application had been rejected, while 37% had not applied for fear of rejection or because of high interest rates. A further 41% said they had not needed financing.
As for the overall condition of their businesses, 45% of the small manufacturers surveyed described it as satisfactory, 16% as good and 39% as poor. Over the next six months, 56% expect the situation to remain unchanged, 9% to improve and 35% to worsen. Regarding their workforce, 88% will keep staffing levels unchanged over the next two months, 5% plan to hire and 7% to make redundancies.
Finally, turnover was unchanged for 45% of respondents, fell for 38% and rose for 17%. The economic conditions index remained in positive territory at 4.8 points in September-October, although it fell from 5.1 points in the previous two-month period (July-August).