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Status: 06/17/2021 10:18 a.m.
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Today, the federal and state economics ministers are discussing how to proceed with corona aid for companies. Warnings against a permanent state economy are getting louder. But some industries are still deeply in crisis.
Tim Sandrock walks through the 3500 square meter hall of his event company. He points to huge loudspeakers, lighting systems or projectors that are piled up to the ceiling. “That would normally all be used outside in mid-June, at theater events, village festivals or music concerts,” says Sandrock. “The warehouse could be completely swept through. But we haven’t moved the technology for at least 15 months.”
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He is one of the two managing directors of Flo-Service GmbH in Mainz. The company has 25 employees and six trainees. The company organizes up to 1500 events per year with a focus on the Rhine-Main area. “We cover everything from disco balls for a teenage party to stage technology for a Sting concert,” explains Sandrock. Although the economy is taking off again across the country, Flo-Service still has few orders at major events due to the pandemic requirements. Most recently, among other things, the Oktoberfest was canceled. This sends a devastating signal to the industry.
Hope for further help
“We are broadly positioned and were able to limit the losses. The Federal Employment Agency helped us a lot through short-time work with around 31,000 euros per month. The bridging aid was also extremely important for us last year,” says Sandrock. “But our company has fixed costs of 150,000 euros every month.”
“I very much hope for further government aid” – Flo-Service managing director Tim Sandrock.
Photo: Axel John, SWR
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Flo-Service mainly draws on its operating reserves before Corona. In addition, there was a tough austerity course. Overall, sales have decreased by a good third. This means that Sandrock is still in a splendid position in the industry. Other companies make a minus of 90 percent or are no longer there.
“In the long run, of course, you can’t finance a company like ours. That’s why I really hope for further government aid,” he says. Cultural events have a pre-planning of three to nine months. In the uncertain Corona time, that’s half an eternity. “I am optimistic that the worst is behind us. We still need support for a transition period. Otherwise all previous payments would be pointless,” said Sandrock.
Economics ministers discuss further aid
The federal and state economics ministers meet today in Düsseldorf – for the first time in attendance again. One question is: what will happen next with the support for the economy? The bridging allowance and short-time work allowance were only recently extended to the end of September and even expanded. Now it is about a renewed extension until the end of the year.
The host of the meeting, the North Rhine-Westphalian Economics Minister Andreas Pinkwart from the FDP, has already made a decision: “I am in favor of the aid being extended beyond the end of September until the end of the year,” he says. “Sectors such as the trade fair and event industry or the showmen will still suffer from a drop in sales in autumn. The Federal Ministry of Economics also sees it that way. I would also like to support this course with the federal government.”
NRW Minister of Economic Affairs Pinkwart is campaigning for a further extension of the corona aid.
Image: dpa
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North Rhine-Westphalia’s Minister of Economic Affairs also refers to legal constraints. “Unfortunately, to fight the pandemic, we had to restrict the freedom of trade. That is why the bridging aid is not subsidy, but compensation. Parts of the economy are only now gradually returning to normal,” says Pinkwart. Now it is a matter of creating transitions for the companies concerned.
Share of businesses in need is falling
More and more companies seem to manage this transition. According to a study by the Institute for Employment Research (IAB), only eight percent of all companies saw their existence threatened by May. In April this value was still 13 percent. “The incidence values are easing in many places, at the same time private companies in Germany are also looking more optimistically into the future,” says IAB Director Bernd Fitzenberger.
So far, the Federal Ministry of Economics has approved a total of more than 105 billion euros for the economy during the crisis. In addition, there is short-time work allowance of around 32.3 billion euros.
Criticism from economists
More and more economists are critical of the ongoing political assistance. Lars Feld is one of them. The 54-year-old economist is regarded as a proven regulatory politician, i.e. oriented towards the principles of market and competition. “The extension until the end of September is fine. But I do not believe in renewed extension,” he says. “The upswing is in full swing. According to the Bundesbank, we will have growth of 3.7 percent this year in Germany. Next year it should be five percent. The need for an expansive fiscal policy that continues to be so strong is therefore decreasing.”
In addition, there are always deadweight effects at companies that find themselves in a difficult situation without this having anything to do with Corona. However, Feld limits his analysis with a view to the event industry. “If the state restricts the constitutionally granted freedom of trade to certain companies in certain industries, then this has to be compensated. But we will have to live with Corona for a longer period of time. Therefore, I think it is questionable whether the events industry can continue as it did before the pandemic . ”
Digital structural change also in the event area
Tim Sandrock in Mainz knows that too. In order to survive economically, Flo-Service had already digitized itself during the lockdown. “We have moved our analogue offerings into the digital space. Instead of a meeting with a projector, screen or interpreting service, we now also offer complete software solutions,” says Sandrock. Corona has massively accelerated development. “There will be a growing digital share at events of all kinds in the future.”
In order not to complicate this structural change, Sandrock is also in favor of a foreseeable phase out of the aid. For the next few months, however, the company needs government aid again. If politicians decide in favor of renewed extension, Sandrock will submit an application. “But I am sure that the industry will recover quickly after Corona. I am also relying on a catch-up effect. Humans are sociable. That is why we will be back.”
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