VDA’s 19th SME Day with 150 entrepreneurs – Suppliers generate three quarters of auto value creation – Activities focus on digitization and electric mobility – Shortage of skilled labor is huge challenge – Remove barriers to innovation
“Over 500 of the 600-plus members of the VDA are supply companies. The German automotive suppliers have a good 314,000 employees in Germany alone. That is more than one third of the German automotive industry’s total workforce. Yet the suppliers’ proportion of value creation is much higher, exceeding 75 percent,” stressed Bernhard Mattes, President of the German Association of the Automotive Industry (VDA). He was speaking to around 150 entrepreneurs as the VDA’s 19th SME Day kicked off in Gravenbruch, near Frankfurt am Main. In addition, Mattes explained, the suppliers were driving forward the transformation of mobility. “From 2015 to 2017, the German suppliers invested an average of 5.7 percent of their turnover in research and development. That is above the international average and demonstrates the drive for innovation in the automotive SMEs,” Mattes said.
The VDA president emphasized that precisely the small and medium-sized enterprises (SMEs) – many of them family-run businesses – would remain of special importance to the German automotive industry. However, this would require the right political and social conditions to be put in place: “Finding skilled workers must be made simpler. A project team includes qualified employees – both graduates and non-graduates. Today we already have a tangible shortage of skilled employees in some areas, especially in the important STIM subjects (science, technology, IT and mathematics).”
A wide variety of options is available for tackling the shortage of skilled labor, according to Mattes. “We must take decisive action to counteract this obstacle to growth and innovation – through appropriate education and training, more improvement in the work-life balance, and eliminating the remaining barriers to bringing in trained specialists from other European countries. Given that non-graduates are also urgently needed, consideration must be given to new ways of providing training courses for employees alongside their work, and to financial support.”
Mattes stated that Germany had to become more competitive, and continued: “Germany has the highest energy prices in the EU. That is a considerable barrier to investment. Reluctance to invest is especially marked in the energy-intensive sectors, which include metal production and metalworking. In the last 15 years these sectors have replaced only 80 to 85 percent of depreciation with new investments.” Mattes added that change was also required in taxation policy. “We welcome the proposed introduction of tax benefits for R&D, but in our opinion other major improvements are also needed in corporate taxation.” Germany must not be left behind as the competition between different national taxation systems gets tougher.
“We ourselves have to shape the changes that come with alternative powertrains, digitization and connectivity. The companies should review their own product portfolios and develop them further. New expertise and different production structures are required,” Mattes appealed to the entrepreneurs. “The automotive value chain is evolving and innovation cycles are becoming shorter, while product diversity and cost pressure are increasing,” he said.
“The German automotive industry is committed to the Paris climate target. We want to do our bit to help road traffic become largely CO2-neutral by 2050,” Mattes underscored. Initially, he said, attention would be focused mainly on electric mobility. In the long term, however, other options would also have to be considered: “It is clear to us that no technological solution may be played off against another. All of them will be needed.” In the longer perspective, e-fuels and hydrogen will make important contributions, and combustion engines will be further optimized. Yet the shift in mobility will be a holistic task for society as a whole, the VDA president pointed out.
Alongside alternative powertrain technologies, he said, connectivity and digitization would make transport more efficient and more sustainable. Over the next three years, the German automotive industry will be investing another 18 billion euros in connected and automated driving. Data security would also be crucial, Mattes said. “The automotive industry has developed the NEVADA concept for this purpose. It helps protect the against hacking and enables third parties remote access to vehicle-generated data via a standard interface.” This project must now be quickly rolled out everywhere, according to the VDA president.
The sector’s topics for the future would also be taken up at the coming IAA, Mattes explained, adding: “In Frankfurt in September the spotlight will be on the five core topics of automation, connectivity, clean and sustainable mobility, urban mobility and mobility-as-a-service. Alongside the exhibition area, there is another new core feature, the IAA Conference. Representatives of the automotive industry will hold discussions with IT, high-tech and mobility companies on four stages.” The IAA is also undergoing a process of transformation, the VDA president emphasized.
Arndt G. Kirchhoff (Managing Partner and CEO of Kirchhoff Automotive Holding GmbH & Co. KG), who chairs the VDA’s SME Day, stressed: “We are right in the middle of a process of transformation that will be decisive for the future success of our industry in the decades to come. With our huge drive for innovation we, the medium-sized supply firms, can play a part in shaping the future. For years the automotive suppliers have been steadily increasing their investments in research and development – and so the proportion of value-creation generated by the suppliers during vehicle production is stable at a high level. We can be proud of that, but we are by no means resting on our laurels – we have to tackle challenges by going on the offensive.”
Kirchhoff underscored the role of the employees in the transformation of mobility: “Even if artificial intelligence and Industry 4.0 mean that the role of machines is expanding, it is still the employees that design, test and develop the products, and ultimately program the machines. In Industry 4.0, human beings and machines have to find a new way of acting together so that the advantages of digitization can be exploited in full.”
The VDA’s 19th SME Day is entitled “Human beings and machines in SMEs.” The event focuses on digital SMEs, sustainability in the supply chain, human beings at the center of digital transformation, and new challenges for purchasing in the automotive industry. The frank discussion between the participants, including the interactions with manufacturers and large Tier 1 suppliers, is a defining feature of the SME Day. Our guest from the realm of politics is Dr. Martin J. Worms, State Secretary in the Hessian Ministry of Finance.