Press Releases

Wissmann: German industry’s drive for innovation depends on SMEs

Berlin, 23 May 2013

“The importance to Germany of industrial small and medium-sized enterprises with their family businesses cannot be regarded highly enough. This sector accounts for around 80 per cent of jobs, making it the strongest pillar of the German economy,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA). He was speaking at the VDA’s 13th SME Day, which is being held in Bonn on 23 and 24 Mai 2013 with the title “Small and medium-sized automotive firms: facing the future with new concepts?” With over 250 high-ranking guests from business and politics, including Garrelt Duin, Minister for Economic Affairs, Energy and Industry (including SMEs and the skilled trades) of the German state of North-Rhine/Westphalia, Prof. Rupert Stadler, Chairman of the Board of Management of Audi AG, Arndt G. Kirchhoff, CEO of the Kirchhoff Group and chairman of the committee for small and medium-sized enterprises at the BDI (Federation of German Industries), and Heinz-Gerhard Wente, member of the Executive Board at Continental AG, this year’s VDA SME Day once again offers a high-calibre panel guaranteeing a constructive exchange between entrepreneurs in small and medium-sized companies.

“The German industry’s drive for innovation depends on the small and medium-sized companies. The suppliers, for instance, make up 75 per cent of the value-added in a vehicle. Many of them are global market leaders in their field of technology. Yet the shift towards renewable energy, the euro crisis, the difficult economic situation in Europe, increasing protectionism and looming new tax burdens pose significant challenges for the German SMEs. Politicians must provide effective support to the companies for tackling these tasks. The successes achieved so far must not be put at risk,” Wissmann demanded.

Today, the VDA president continued, entrepreneurs in small and medium-sized businesses were required to be both present all over the world and flexible. “The right investment decisions have to be taken early on to keep the businesses competitive in the long term. They are facing the difficult task of anticipating global developments and developing the appropriate strategy,” Wissmann said.

He called on policy-makers to provide stable and reliable overall conditions in Germany as a production location. “At present Germany is still in a good position. In recent years employees and employers have jointly benefited from the structural reforms and the intelligent collective bargaining policy. The number of employees in the German automotive industry rose to over 742,000 last year. This means that in the last two years over 40,000 new jobs have been created in Germany.”

Wissmann warned against new tax burdens that would hit family businesses in particular. “Concepts for a wealth levy or wealth tax cause real headaches for our SMEs.” Wissmann stressed that a wealth tax in the form of a tax on property would obviously particularly overstretch businesses with low earnings levels, and would exacerbate the crisis precisely at times of economic weakness. “Excessive increases in taxes will harm growth and employment. That would damage Germany’s position as a production location and lead to lower tax revenues overall,” the VDA President said.

Wissmann also spoke about the European Commission’s proposed CO 2 target for passenger cars, of 95 g CO 2 /km for the year 2020. He said that Europe was thus introducing the strictest CO 2 requirements. “If we are to reach this very ambitious CO 2 target, a considerable proportion of newly registered cars must be equipped with alternative drive trains. It is imperative that this also be taken into account in the Regulation. European policy must not put the brakes on innovations, but instead must exhaust all the options for accelerating new technological developments. In view of the increasingly tough international competition, industry requires intelligent, active flanking measures from politicians. Only if they pull together can business, the trade unions and policy-makers master the challenging task of enabling Germany as a production location to weather the times ahead. We need more growth and more innovation,” Wissmann explained.

In his speech entitled “Premium in global competition. How do we ensure our joint success?” Audi Chairman Prof. Rupert Stadler explained that three quarters of automotive value-added is generated by the suppliers. “Even if customers are less aware of you, it is still true that technical innovations from small and medium-sized suppliers underpin Germany’s excellent reputation as an automotive production location. They have become global leaders.” For the automobile and supply industry, Stadler added, internationalisation meant additional capacities and growth both at home and abroad. “Every vehicle we build elsewhere always means that we also employ people in Germany. The globalisation I am talking about does not signify relocation.” Stadler emphasised that for the automotive industry it was important that increases in taxes and levies were clearly rejected. Tax increases would hinder growth and damage Germany as an industrial location. They would put German companies at a competitive disadvantage. “Those who want to be active at the international level must also produce at the international level. If the German SMEs have a global position, they will be more resistant to regional risks. For us internationalisation also means taking a common approach within the Association to act against protectionism. Trade barriers are no longer appropriate to the times, they hinder exports of our products,” Stadler stressed.

Arndt G. Kirchhoff, who is CEO of the Kirchhoff Group, chair of the BDI’s committee for small and medium-sized enterprises, chair of the VDA’s Committee for Small and Medium-Sized Companies and a member of the VDA’s Managing Board, focused his speech on the topic of globalisation. The German automotive industry was especially dependent on foreign markets, he explained. Over 85 per cent of German vehicle production at home and abroad was sold outside Germany. “The German automotive industry benefited greatly last year from the path taken. While dark clouds were gathering over Western Europe due to the public debt crisis, the German premium manufacturers got some relief from the fact that above all in China and North America they were maintaining their attractiveness and continuing the dynamic growth of recent years. Keen demand abroad, however, also indicates the great standing enjoyed by our products. In future, too, small and medium-sized companies will continue to make a major contribution to the success of the German automotive industry,” Kirchhoff stated.

Heinz-Gerhard Wente, Board member at Continental AG and head of the ContiTech division, gave a speech entitled “Present on all the markets? Strategies for a successful future,” pointing out that automotive suppliers had to produce wherever their customers were. “Our strategy of investing early in growth markets such as Asia, Brazil, and Central and Eastern Europe has made us less susceptible today to economic turbulence in other parts of the world. In this way we are strengthening our overall worldwide presence – on all the relevant markets,” Wente said.

Garrelt Duin, North-Rhine/Westphalian Minister for Economic Affairs, Energy and Industry, had accepted the VDA President’s invitation and spoke on the subject of “Focusing on SMEs – what is the state doing, and what can the Federal Government do?” Duin drew attention to SMEs’ high potential for innovation and their flexibility: “Small and medium-sized businesses in particular are discovering niches and gaps in the market faster than other companies. And they use them for developing new customer-oriented products, processes and services. We want to reinforce this innovation potential,” he added. In -Rhine/Westphalia, Duin said, there was a desire to shape the conditions for the small and medium-sized enterprises so they could develop their flexibility, speed and drive for innovation in the best way possible: “Our new ‘SME law,’ which the State Parliament passed last December, contributes to that. At the heart of the new law is a clearing procedure which is unique in Germany. It serves to check all the relevant legislative projects of the State Government for their SMEs-compatibility.”

“The small and medium-sized suppliers to the German automotive industry have no less drive for innovation than the global players,” said VDA Managing Director Klaus Bräunig at the SME Day. “Their developments such as the lane departure warning and the emergency braking system considerably enhance the performance of the German automotive industry; their capabilities are essential in the optimisation of conventional drive train technologies and the continuing development of alternative ones,” Bräunig declared. The German suppliers, he said, were represented by more than 1,500 production sites around the world, over 200 of them in China. Yet international competition was increasing: “The small and medium-sized firms can be successful in the long-term only if they are present on the international markets,” he said.

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