The economic recovery of businesses affected by the dana of October 29, 2024 continues to encounter obstacles two years after the floods. Although seven out of ten businesses have recovered or exceeded their level of activity prior to the disaster, around … 2,000 establishments have still not managed to return to normal. Among the difficulties faced by some of them is a less visible problem than material damage or loss of customers: the breakdown of their supplier networks.
The floods not only affected commercial premises, but also the companies that supplied them with products. The closure of some suppliers, business interruptions and rising costs forced numerous establishments to look for new alternatives.
This is clear from the study ‘The urban economic activity of zone zero of the Dana of Valencia, after two years of the floods’, prepared by Cámara Valencia, which reflects that two out of every ten establishments, which is equivalent to 2,000 businesses, have had to change suppliers, a figure that practically represents the total number of companies that a municipality such as Catarroja or Riba-roja de Turia has.
Along these lines, the coordinator of the study, Amadeo Aznar, clarifies that the change of suppliers is not the main factor that explains why some businesses have not yet recovered their activity. In this sense, it points to other circumstances with a greater impact, such as the loss of purchasing power of families affected by the dana.
However, although it is not the direct cause that these businesses have not recovered, the breakdown of normal commercial relations and the increase in the cost of supplies have meant added damage for some establishments, especially for smaller ones.
Thus, although Aznar highlights “the great capacity of companies in the affected regions to maintain their commercial relationships and find new suppliers”, 8% of businesses had to look for suppliers in other areas of Spain and, on the other hand, in some cases “substitution has meant assuming higher prices and transport costs.”
As Aznar details, these difficulties have especially affected smaller businesses – companies with fewer than five workers – that have less capacity to negotiate commercial conditions. This change of suppliers has also affected the non-food trade group more. Specifically, “within this group are businesses selling goods for personal use, for the home or goods for occasional consumption,” he indicates.
Rising prices, a less decisive factor
Likewise, among the reasons why stores have changed suppliers, Aznar explains that the main one has been their permanent or temporary closure, while the increase in the price of products by the usual supplier “has been a less decisive factor when it comes to changing.”
“However, this change has meant an increase in costs for some businesses, especially for smaller businesses: a third say that new suppliers offer less favorable prices and just over a quarter report higher transportation costs,” he highlights.
For Aznar, that 82.9% of the establishments surveyed have maintained their suppliers, “shows the strength and response capacity of the companies in the regions affected by the flood”, while “reflecting the economic development of these regions, where there is a wide variety of industries, distributors, commercial intermediaries and service companies that meet the needs of local businesses.”
In this sense, the coordinator of the study points out that “the current economic situation is also behind the new costs that businesses that change suppliers must bear.” “The new commercial relationships between suppliers and customers already incorporate the increase in costs and transportation derived from geopolitical tensions,” he points out.
In this way, Aznar emphasizes that “maintaining a long-lasting relationship with a supplier in which specific conditions have been agreed upon, although they can subsequently be adjusted to a greater or lesser extent, is not the same as starting a new relationship in which current prices and costs are based.” Furthermore, the report concludes that businesses affected by the floods are now more vulnerable to the economic situation.
Source: www.abc.es
