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.