Industry report confirms solid economic development among German suppliers
“The suppliers have achieved new strength since the crisis of 2008/2009. The latest industry report from the Commerzbank confirms the solid economic development among German suppliers,” said Klaus Bräunig, Managing Director of the German Association of the Automotive Industry (VDA), at a Commerzbank press conference in Stuttgart. “By international comparison the German supply industry, with its many small and medium-sized businesses, is once again in a very good position, but has to tackle some major challenges,” Bräunig said.
The work toward globalization during recent years had underscored the suppliers’ aim to be present worldwide with cutting-edge technology, Bräunig said, and this aim was also reflected in the suppliers’ top rankings. Currently the three largest supply companies in the world were headquartered in Germany.
“Only globally active firms that supply around the world can benefit from the high-growth markets and enjoy success in the long term. The vehicle manufacturers’ global purchasing policy demands that suppliers are able to supply all over the world – with consistent quality and at competitive prices. Small and medium-sized suppliers are now also pushing to become more international. Many smaller SMEs without foreign production capacities are facing the decision to invest in the growth markets. So they must examine their business model regularly if they are to remain part of an international, highly competitive value chain,” Bräunig explained.
The pressure was rising along the entire value chain, he added. “Suppliers account for 75 percent of the added value in automobiles and now also for 50 percent of the development input. It is precisely the small and medium-sized suppliers that underpin Germany’s good reputation as an automotive production location with their technical innovations,” the VDA managing director stressed.
However, he stated, existing achievements must not be taken for granted. The suppliers’ ability to innovate depended on many factors, such as the know-how of specialists and the right general conditions.
“For this reason, the German suppliers need a location policy that boosts companies’ drive to innovate and invest and does not weaken industry or the SMEs. The supply firms in Germany are well positioned but they have to continue fighting to maintain their competitiveness. To safeguard these businesses we must both promote internationalization and again work on Germany’s competitiveness,” he continued.
Accessible markets were essential for companies aiming at internationalization, Bräunig said, adding: “Politicians have to counteract protectionist measures and bring the Transatlantic Trade and Investment Partnership (TTIP) to a successful conclusion. The companies’ drive for innovation had to be maintained because it was necessary for international success.
“And the domestic sites must not be jeopardized by high tax burdens and disproportionately high energy costs,” Bräunig emphasized. The policy-makers in particular were now called on once again to strengthen Germany as an industrial location by creating the appropriate framework conditions.