Month: March 2020

Automotive suppliers brace for impact of Covid-19 crisis, call for coordinated support measures

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The European automotive supply industry is bracing itself for the impact of the Corona-19 crisis, with activities coming to a standstill due to supply shortages and falling demand and, most importantly, to protect the health of employees and the community at large. The industry stresses the need for strongly-coordinated support measures taken across Europe.

in CLEPA, 25-03-2020

CLEPA, with the support of McKinsey, has polled its members over the past few days on the impact of the Covid-19 crisis. While it is difficult to make firm predictions at this stage, 60% of respondents expect to lose 20% or more of revenue. Over half of respondents count on a full recovery time of at least 6-12 months. 95% of respondents call for fiscal support by governments, 80% support labour market measures including temporary work time reduction and 76% call for cash infusion and measures to increase access to liquidity.

“The automotive supply industry needs strongly-coordinated support in Europe a number of areas, including financial and labour related measures”, said Sigrid de Vries, CLEPA Secretary General. “Relaxing state aid rules and providing tax breaks, investment guarantees, loans and other means are essential to help ensure the survival of many healthy companies which are hit by the crisis. Transparency, coordination and the availability of easily accessible information across the EU are a clear need as well.”

“The period beyond the immediate health crisis must already be in focus too, to help ensure that the economic impact can be mitigated as much as possible. Early planning, coordination and synchronisation across borders and supply chains will again be crucial. Steps must also be taken to strengthen the global competitiveness of the automotive industry, keeping in view the twin ambition of a carbon-neutral and digital society”, she added.

Automotive suppliers large and small are taking numerous initiatives to help the manufacturing of essential medical equipment and protective gear, as well as to provide support in other ways such as sharing health & safety practices or supporting local community initiatives. “Many of our members contribute to containing the virus and to saving lives by producing ventilators, providing safety masks and through other means”, said De Vries.

Covid-19 will undoubtedly have a major impact on the economy, including the automotive industry. Automotive suppliers have announced temporary closures of manufacturing plants at a large scale. “In most cases only limited production and core functions will continue to uphold essential operations and services, as well as to secure the availability of spare parts for repair and maintenance. It is expected that 90% of activity will come to a halt for at least a number of weeks and also non-manufacturing work is increasingly scaled back. Some companies are already in economic distress and need support.”

CLEPA informs its members on a regular basis and has set up a Covid-19 Task Force composed of member companies and associations. In times where strong cooperation is needed, CLEPA is also collaborating with other organisations and stakeholders in Brussels.

 

Industrial reinassance? Why automotive is a critical technology for Europe

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Does Europe’s automotive industry lag behind, supposedly stuck in producing “state-of-the-art technology that is however no longer wanted”? Or is Europe’s automotive industry a key asset in the quest for carbon neutrality, digital leadership and a sustainable, globally competitive economy?

in CLEPA, by Sigrid de Vries, 05-03-2020

Regardless of what might seem popular belief, it’s high time general mindset adapted to the latter. The upcoming new Industrial Strategy offers a key opportunity to do so.

It’s not a matter of ‘if’ but of ‘how’ to achieve the ambitious objectives of carbon neutrality, digitalisation and sustainable growth. And for that to happen, Europe must play to its strengths. The European automotive industry, and in particular the automotive parts and components industry, has strong assets to this regard.

Automotive is a prime example of a strategic value chain, and mobility is a booming business

The sector ranks among the most competitive, innovative and resilient, employs a highly-skilled workforce of 5 million and invests more in R&D than any other private party. Automotive is also a prime example of a strategic value chain, with a long string of companies and activities linking the products’ coming about from cradle to grave and back, and with a wide ripple effect into other parts of the economy. One job in vehicle manufacturing creates on average 3 more in the direct supply chain and a further 3 to 5 in the wider economic fabric.

Mobility, furthermore, is a booming business with further growth and demand expected. With the face of mobility changing to connected, automated, shared, seamless and multimodal, products and services become increasingly smart, linked, usage rather than ownership centred, and technologically complex. There is a lot of value to be had in mobility, with new players from tech to telecoms eagerly wanting a piece of the growing pie.

Why is China investing so heavily in growing its own competitive automotive industry? Because of the high value-add and trigger effect for broader economic activity. How does China try and secure a place at the global automotive stage? By putting massive efforts in automotive R&D aiming for advanced quality products, mimicking the strategies of its strong EU competitors.

The sensors in your smart phone that measure your steps or ambient temperature were designed for use in cars first, not phones

Does China limit itself to electric vehicles? No doubt electric is where the offensive started, rooted in cheap access to battery production as much as in trailing competence in combustion-engine technologies. But China is also the world largest producer of ‘traditional’ vehicles and powertrain components (20% of Europe’s imported automotive parts come from China, as the impact of the Corona virus has vividly brought to attention), and the country is massively eying hydrogen-based solutions as well. Because mobility doesn’t allow a one-solution focus: urban buses are a key target, as is long-haul transport.

Will it then, ultimately, be the large tech companies that make their automotive competitors obsolete? At least for now, the tech-meets-automotive encounters don’t point in that direction.

Tesla’s positioning itself as a tech company can be seen also as an acknowledgement that understanding and mastering whole-vehicle architecture is a competence in itself. A vehicle is a complex system of systems which need to work in an integrated, secure, safe, clean and steady manner for years on end. The sensors in your smart phone that measure your steps or ambient temperature were designed for use in cars first, not phones, and by automotive suppliers who are used to design against extreme circumstances, be it vibrations, weather events or others.

Together with the vehicle manufacturers, automotive suppliers combine expertise in technology, vehicle architecture and manufacturing that is second to none in the world. They lead in system integration which allows manufacturing of a complex good like a car on industrial scale, at highest quality level at competitive cost. Integration of advanced technology at ‘automotive grade’ level represents an excellence, a critical knowledge and strategic knowhow that are precious and enviable.

There is no alternative to climate change or digitalisation. What’s needed, is a business case that works

The challenge now, for Europe, is to allow European industry to thrive in order to meet the ambitious targets society has set. The justification is a given; there is no alternative when it comes to climate change or digitalisation. What is needed, is a business case that works—a model to earn a revenue by serving customer demand, upholding the values we all hold dear, supporting economies and jobs in Europe in successful competition with other regions in the world.

In business terms this means two things: if Europe is serious about leading the world, this must also entail that others actually follow. If they don’t or adopt a different pace, Europe risks losing crucial parts of its value chain and the ultimate goals won’t be achieved either.

The second reality is that current technology pays for new technology. Hence, innovative transitional technologies are an essential asset and lever to establish a mass-market for the more disruptive solutions, in an ecological, affordable and economically sustainable way.

We have high hopes for the new EU industrial strategy which is to accompany the Green Deal and the Digital Agenda. The signals from the Digital Strategy and Data Strategy are positive. As regards the ambition to turn the Green Deal into a growth strategy, CLEPA will work with policy makers and stakeholders to ensure a supportive regulatory framework that is free of technology bias, promotes innovation, invests in education and skills, and applies a holistic approach. We are keen on looking at the broader picture of both the vehicle and the system it is embedded in, including infrastructure, energy sources and carriers, and the link with related strategic value chains.

 

Sigrid de Vries, CLEPA Secretary General

CLEPA Press Release | EU Climate Law: “Long-term planning essential, regular check against delivery too”

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The Commission adopted yesterday the proposal for a Climate Law, containing the “binding objective of climate neutrality in the Union by 2050”, the right for the Commission to adopt the post 2030 trajectory in comitology, as well as a framework to implement corresponding policies and to assess progress on Union and member state level.

in CLEPA, 05-03-2020

Sigrid de Vries, Secretary General of CLEPA, the association of automotive suppliers’ in Europe:  “We consider the climate law as one instrument of several within a comprehensive strategy on mitigating climate change, reaching climate neutrality in 2050. We support the development of a long-term EU strategy to reduce GHG emissions because of the inherent opportunity to provide planning certainty for companies. It should be built on a clear definition of what constitutes climate neutrality and on an assessment of the impact of such a law on the citizens and companies within the EU to ensure that we maintain the balance of ecologic, economic and social aspects.

“The reduction of GHG emissions depends largely on technological innovation, its deployment and acceptance by citizens. It is not possible to forecast reliably such progress or prescribe it by policy in the long-term perspective up to 2050, making regular reviews of the effectiveness of the strategy and potentially adjustments necessary. Similarly, GHG emissions will have to be reduced substantially outside the EU as well for the policy to be effective. Such reduction should be considered in the review of the EU climate policy.”

“In the Climate Law, there is no reference to policy developments in other important regions of the world, such as China or the US. The Climate Law foresees to assess progress towards climate neutrality but not the policy approach itself, whereas a regular check of being on the right track would benefit from such assessment too.”

“The automotive suppliers’ industry in Europe is a driving force behind the transformation to sustainable, safe, and smart mobility. We support the Paris agreement and are ready to contribute to a reliable, technology-open, and ambitious regulatory framework to achieve its objectives. We urge the European legislators to build on Europe’s strengths—the single market, the continent’s advanced technology competence, its high value-add industrial base and global competitiveness—and to provide the coordinated and comprehensive regulatory framework needed to master the monumental tasks unfolding.”