Month: April 2020

Portugal’s car parts makers resume production as coronavirus spread slows

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Portuguese car component manufacturers, among the country’s top exporters, are calling thousands of employees back to work even before a nationwide COVID-19 lockdown is lifted as Europe’s automotive sector resumes production.

in Reuters, by Victoria Waldersee, 17-04-2020

Companies like Bosch (BFREN.IS), Continental Mabor, and Volkswagen’s (VOWG_p.DE) Autoeuropa plant suspended production in March as demand slumped, non-essential businesses were instructed to close and workers stayed at home to care for children after schools closed across the country on March 16.

But with carmakers like Toyota (7203.T) and Volkswagen announcing they will restart production in Europe in the coming week, the export-oriented industry is tiptoeing back to work, even as parliament voted on Thursday to extend the state of emergency in place since March 18 to May 2.

Automaker Bosch, which exports 90% of its output from Portugal to over 50 countries and employs around 5,000 people, has restarted production at all three of its facilities, albeit with just 30% of workers present at its smallest operation in Ovar, a northern municipality badly hit by the outbreak.

Continental Mabor, a tire manufacturing factory also among the country’s biggest exporters, re-opened its production lines on Tuesday, with its 2,300 staff taking turns to work in 15-day rotations.

Volkswagen’s Autoeuropa plant, the country’s top exporter in 2019 employing nearly 6,000 staff, is resuming production in a similar shift pattern on April 27, the company announced on Wednesday, after a month of suspension.

“Clients are slowly restarting production in Europe, and they need parts – so companies are stepping in,” secretary-general of the Association for Producers for the Automobile Industry, Adao Ferreira, told Reuters.

NERVOUS WORKERS

A total of 930,000 workers have been temporarily laid off across the country which has so far reported 18,841 confirmed cases of the novel coronavirus, and 629 deaths.

“Employees are a little apprehensive about it,” Joao Reis, a worker at Autoeuropa, told Reuters. “There’s pressure to get the economy going again, and we know our jobs could be at risk if the company stayed on hold – but we don’t know yet whether the pandemic is really slowing, and that makes some of us nervous.”

Autoeuropa is taking extensive measures to comply with safety regulations, including supplying masks and gloves, ensuring workers keep at safe distance and organising transport to and from the factory, Reis said.

The move represents the beginnings of a return to normality in the export-oriented economy forecast by the IMF to suffer an 8% drop in GDP as a result of the crisis.

Still, whether factories will remain open long-term is unclear. “Things are still very uncertain and measures are being revised daily,” Bosch spokesman Abilio Diz told Reuters, declining to comment further.

As the curve of new infections flattens, the new presidential decree extending the state of emergency by another 15 days opens the possibility of a gradual reopening of services, as long as data continue to show a slow in the spread of the virus.

 

Reporting by Victoria Waldersee; Editing by Emelia Sithole-Matarise

 

FILE PHOTO: An empty assembly line is pictured at Autoeuropa Volkswagen car factory during partial lockdown as part of state of emergency to combat the coronavirus disease (COVID-19) outbreak in Lisbon, Portugal March 30, 2020. REUTERS/Rafael Marchante

CLEPA and ACEA Press Release | Automotive industry signs joint Code of Business Conduct to support re-start of production

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CLEPA (the European Automotive Suppliers’ Association) and ACEA (the European Automobile Manufacturers’ Association) have jointly adopted a ‘Code of Business Conduct in view of COVID-19’ to support a rapid and smooth restart of the automotive industry.

in CLEPA, 15-04-2020

The automotive eco-system resembles an intricate clockwork and today’s unprecedented standstill of operations risks doing a lot of damage to an otherwise thriving, innovative and competitive industry. A successful exit from the corona crisis will require timely sharing of critical and appropriate information, making sure that all players in the value chain can plan and act as effectively as possible. The Code of Conduct therefore contains chapters on health and safety in the workplace, timely communication, contractual requirements and coordination of the restart.

“While the safety and wellbeing of our communities remains first priority, a well-coordinated and timely restart of the sector is of utmost importance to mitigate the impact of the COVID-19 crisis for society. The joint automotive industry code of conduct will make a real difference in this process,” said Sigrid de Vries, Secretary General of CLEPA.

“We are committed to emerge from the crisis even stronger, and all partners in the value chain have a shared responsibility in managing the industry re-launch in a sustainable way. The code of business conduct gives manufacturers and suppliers essential guidance on the approach needed to overcome the COVID-19 crisis,” said Eric-Mark Huitema, Director General of ACEA.

13.8 million Europeans work in the directly and indirectly auto industry. As a consequence of the crisis, more than 1.1 million automobile manufacturer employees are on temporary leave, with a multitude of colleagues affected in the supply chain as well as dealerships. The loss of revenue is estimated to run into double digit percentages and uncertainty remains high as to how quickly the sector can recover. Industry, in close coordination with public authorities is seeking to gradually restart manufacturing in the next few weeks.

As stipulated in the code, COVID-19 represents a global health, societal and economic challenge with severe potential impact on individuals, corporations and countries. The minimisation of risks for employees and the community at large should have always highest priority. Navigating the COVID-19 crisis together in a spirit of partnership, in compliance with the applicable competition laws, yields the best possible results towards protecting individuals and minimising economic damage.

 

CODE OF CONDUCT

 

About CLEPA

  • CLEPA represents over 3.000 companies and over 20 national associations and sector associations
  • Automotive parts and system suppliers provide state-of-the-art components and innovative technology solutions for safe, smart and sustainable mobility, investing over 25 billion euros yearly in research and development.
  • Automotive suppliers in Europe employ overall nearly five million people across the continent.
  • More information about CLEPA can be found on www,clepa.eu or https://twitter.com/CLEPA_eu.

Contact: Clara Guillén, Communications Manager, c.guillen@clepa.be, +32 2 743 91 20.

 

About ACEA

  • ACEA represents the 16 major Europe-based car, van, truck and bus manufacturers: BMW Group, CNH Industrial, DAF Trucks, Daimler, Ferrari, Fiat Chrysler Automobiles, Ford of Europe, Honda Motor Europe, Hyundai Motor Europe, Jaguar Land Rover, PSA Group, Renault Group, Toyota Motor Europe, Volkswagen Group, Volvo Cars, and Volvo Group.
  • The ACEA commercial vehicle members are DAF Trucks, Daimler Trucks, Ford Trucks, IVECO, MAN Truck & Bus, Scania, Volkswagen Commercial Vehicles, and Volvo Group.
  • More information about ACEA can be found on www.acea.be or www.twitter.com/ACEA_eu.

Contact: Cara McLaughlin, Communications Director, cm@acea.be, +32 485 88 66 47.

CLEPA | Restarting the automotive industry is simply impossible without close coordination and support

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Within the space of only a couple of days, the automotive industry in Europe has come to an almost complete standstill and millions of people are at home to either work from there or, more often, bide their time until life returns to normal.

in CLEPA, by Sigrid de Vries, 03-04-2020

First priority for the industry is the health and safety of employees and society at large. The many initiatives to manufacture medical equipment and protective gear pay testament to that. In parallel, the sector is doing all it can to minimise the damage to an otherwise thriving and competitive industry. Driven by a strong wish of all players in the value chain and building also on the lessons from the severe crisis in 2008/9, the automotive industry is determined to overcome the situation in a strong fashion.

The situation is, however, unprecedented and the way ahead looks bumpy. A survey amongst CLEPA members between 20 and 24 March provides a clear view of the potential impact, even without having clarity on the duration of the crisis today. A majority of respondents expect a loss of sales by more than 40% during the next 3 months as well as a 25% reduction of revenues over the entire year. They expect an even larger impact on profitability. The biggest impact is expected in Europe, with a total of €58 billion of revenues considered at risk.

The most immediate need is to ensure liquidity. Automotive parts and components suppliers are faced with the same problem of many other sectors: the almost complete lockdown of operations leads to a collapse in revenue, while running costs still have to be paid. Capital is being used up and companies risk going bankrupt if they run out of liquidity.

The many government support measures announced, from relaxation of state aid rules, to tax breaks, investment guarantees, loans and other measures, are therefore all welcome and needed. Measures such as the reduction of working time with wage compensation, temporary unemployment schemes and other flexibilities in labour rules are also crucial.

Industry estimates that the demand for cash is likely to continue for some time to come, especially if consumer demand will not return to pre-crisis levels for a while. Therefore, once the pandemic ceases, the economy will need continued support in order to avoid a drawn-out depression like that of the 30s. Demand-side measures must be part of the picture too.

An equally manifest concern is the colossal job of getting the entire automotive manufacturing chain up and running again.

The orderly restarting of production across the entire automotive industry value chain is simply impossible without close coordination, both within industry and between industry and public authorities. A successful exit from the crisis will require timely sharing of critical and appropriate information, making sure that all players in the value chain can plan and act as effectively as possible. The automotive eco-system resembles an intricate clockwork of interdependent bits and pieces. Solidarity, partnership, and the need for a post-crisis mindset are words often heard within the sector these days.

Policy makers, too, can contribute by playing in concert, orchestrating measures in a timely and coordinated manner as much as possible.

Automotive suppliers call on the EU and member state governments to coordinate the lifting of restrictions. They urge to define common criteria on when the crisis measures can be reduced, to broker a timeline amongst member states for a smooth exit from the crisis, to coordinate on the conditions, measures and timeline for workplace safety, and to watch over the integrity of the Single Market, by letting goods and people move again as soon as possible, in a safe manner.

Europe should also recognise vehicle maintenance and delivery of spare parts as essential services and exempt these from restrictions. Services supporting passenger transport and logistics were already explicitly included in lists of essential services.

The automotive value chain is deep and long, with a wide ripple effect into other sectors of the economy. The sector plays an important role in the economy as a whole, and is in fact ‘system critical’, to use the policy jargon of today. This should be recognised and kept in mind when elaborating crisis-exit measures.

Interestingly, in the CLEPA Pulse Check survey, over 70% of respondents voiced confidence about the possibility of a recovery within one year. However, 94% are expecting lasting changes to their way of working, with 38% expecting an increase in regional sourcing and 37% expecting an increase in local production. These are major tell-tale signs of the fundamental impact the crisis may have.

Just a few weeks ago, in what now seems a different era, the Commission stressed the importance of critical value chains and technical sovereignty in the New Industrial Strategy for Europe. This has only gained dimension and importance. The crisis is sending shockwaves through society and the economy that we cannot yet fully comprehend today, but on which deeper reflection will soon have to start.

 

Sigrid de Vries

CLEPA Secretary General