“Party mood over” – domino effect scares automotive supplier

It is the classic domino effect. Whenever the big car companies have to deal with problems, this inevitably affects the suppliers.

After years in which things only ever went up, the concern is now great in many places. And after a weak economy and an expensive technological change first caused the major manufacturers to falter, the impacts are now piling up on the level below them. The consequence: profit warnings, job cuts, plant closures or even worse.

"We’ve had some super years," says industry expert peter fub of the consulting firm ernst& young (EY). "This celebratory mood is now over."This applies to manufacturers and suppliers alike. And it’s only logical: "for every car that isn’t produced, the parts aren’t produced either," says fub. In addition, suppliers have also had to invest a lot of money in order to keep up with the major trends of electromobility and autonomous driving. "I can only spend on innovation what i earn elsewhere". Savings will have to be made."

The list of prominent traps is long: listed suppliers continental and schaeffler have scaled back their expectations for the current year. ZF in friedrichshafen expects sales to drop by billions of euros. The company is "significantly below our targets due to the shrinking automotive market," said CEO wolf-henning scheider on friday.

Industry leader bosch is also cautious, with more jobs on the line in the diesel sector. Mahle in stuttgart is on an austerity course, cuts jobs and closes one of its plants that is heavily dependent on combustion technology. Conti has also announced the closure of one plant.

Marquardt, a specialist for gearshift and control systems from the south of baden-wurttemberg, is relocating hundreds of jobs abroad. 1200 jobs to be cut worldwide at filter specialist mann+hummel. Austrian equipment manufacturer andritz cuts about 500 jobs at its german subsidiary, press manufacturer schuler. And at the beginning of the week, the plant manufacturer eisenmann from boblingen, which among other things builds painting plants for the automotive industry, filed for insolvency. High losses due to problems with some major projects have been cited as the reason.

Not only, but especially, the car state of baden-wurttemberg is strongly affected. Around 470 people work here alone.000 people in the auto industry or or in their immediate environment. And here alone, as the IG metall trade union recently surveyed its operating rates, every second company in the affected sectors has launched more or less tough cost-cutting programs.

The company is caught between rising wage costs on the one hand and the cost pressure passed on by the car companies on the other, says stefan wolf, head of the supplier elringklinger and also chairman of the employers’ association sudwestmetall, on the sidelines of an industry tour organized by the stuttgart economics ministry. The only way out: cut costs ourselves, become more efficient.

"The automotive industry is on the verge of the biggest change in its history," stresses wolf. In order to survive, there needs to be openness to technology and more cooperation between politics and business, but also between companies themselves, for example in the development of uniform systems and platforms. "There is still too much egoism," he criticizes. Wolf, a staunch advocate of the fuel cell, believes it is "absolutely wrong" for VW to be putting all its energy into battery-powered electric vehicles.

For IG metall, the focus is naturally on employees’ concerns about their jobs. Roman zitzelsberger, head of the state government, doesn’t think it’s right to just switch to "job defense mode" and not worry about the future. "It sounds strange that I say that," he adds, just in case. But it is important to face up to change, to actively tackle it. "The decisive factor is that we have the capacity and the know-how," emphasizes zitzelsberger. What is lacking is courage and an overall political strategy. And: "we have to further develop the digital competence of our employees."

EY expert fub believes it is inevitable that change will cost jobs – at least in some areas. Because people were urgently needed elsewhere at the same time. He also advocates cooperation in order to keep the horrendous development costs in line. And for openness to technology.

This is particularly important to many suppliers because electromobility currently still costs a lot and brings in very little. Also there they are quite similar to the manufacturers. Mahle, for example, like many other companies in the industry, is taking a multi-pronged approach: although innovation is strongly focused on future technologies. But the burners still bring in the most revenue. "The change that demands everything of us costs money," says bernd eckl, a member of the group’s executive board. You have to keep the costs in check and still invest.

Like him, elringklinger boss wolf also believes in the internal combustion engine. And fub sees a lot of potential in it, too. "We’re still talking about homeopathic unit numbers for the electric car," he says. And you have to think globally. "The combustion engine is definitely not dead."

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