Strong small and medium-sized enterprises crucial for successful transformation

The 22nd SME Day of the German Association of the Automotive Industry (VDA) opens today in Gravenbruch in Hesse. Under the key note "Making Germany future-proof as a location", the main focus is on the topics of transformation and sustainability as well as the stabilization and diversification of automotive supply chains.

"The current circumstances could hardly be more challenging: The ongoing, terrible war of aggression that Russia is waging against Ukraine, the policy of tough COVID lockdowns in China and the shortages of semiconductors, other preliminary products and raw materials are putting a strain on our supply chains to an unprecedented and unforeseeable extent. Added to this are the effects of the sanctions against Russia. Sanctions that we support with full conviction and with all our might - and which of course also affect us," said VDA President Hildegard Müller at the opening of the SME Day.

"Declining output as well as massive increases in prices for energy and raw materials are a particular burden for medium-sized automotive companies and confront them with great difficulties when it comes to securing short-term liquidity and investments in the transformation," the VDA President continued.

Added to this is the generally challenging environment of Germany as a business location: compared to the OECD countries, companies face an above-average tax burden, the world's highest labor costs in the automotive industry and the highest industrial electricity price of an EU automotive nation. The COVID pandemic has once again shown the great need to catch up in the digitization of administration.

Hildegard Müller emphasizes: "The framework conditions are crucial for a sustainable and successful transformation. The conditions as a business location must be world class if we want to master the future. This applies to an internationally competitive tax and levy system, the reduction in bureaucracy, the expansion of renewable energies, the training of skilled workers, the digital infrastructure, the charging infrastructure or the low-bureaucracy implementation of the Supply Chain Due Diligence Act. We also need faster and more effective planning and approval processes. The problems are on the table. Politicians must now finally make decisions."

It is also important to learn from the crises. Germany's dependency is not only evident in gas and oil. "We need an active foreign policy on raw materials and more energy partnerships. We see that other countries are very active and are securing access. Germany has to be more than just a spectator here." Müller points out: "If production moves away from Germany, nothing is gained - neither for prosperity and social peace nor for climate protection."

The VDA President emphasizes: "Change through trade is still the right way. Russia's violation of international law shows that we need to strengthen our cooperation with other countries. In Germany and the EU we need a new, courageous and offensive trade policy. We cannot and must not allow ourselves unfinished trade and investment agreements such as TTIP, CETA or Mercosur."

"It doesn't work without small and medium-sized businesses"

Arndt G. Kirchhoff, Chairman of the Advisory Board of the KIRCHHOFF Group, VDA Vice President and Chairman of the VDA SME Group, emphasizes:

"Small and medium-sized businesses are job engines, they secure jobs and prosperity in our country. They are deeply rooted locally and shape the identity of entire regions. And medium-sized companies are drivers of innovation and transformation. One thing is certain: it won't work without small and medium-sized companies."

Kirchhoff continues: "The medium-sized automotive sector stands by Germany as a location. In recent years we have created numerous new production and development locations in Germany and contribute significantly to training and good work in the regions. What we need now is a flexible and far-sighted policy that enables us to shape the transformation on our own in harmony with our customers and employees."

Regardless of the challenges, the German automotive industry is driving the transformation to electromobility. To this end, it is making huge investments: by 2030, it will invest at least €100bn in the conversion of plants in Germany alone. And in the area of ​​research and development, the German automotive industry will invest more than €220bn worldwide in the years 2022 to 2026 alone, primarily in electromobility and digitization. "The major investments are an expression of our will to enable climate-neutral mobility as quickly as possible," says Müller.