Press Releases

Suppliers see internationalisation as an opportunity

Frankfurt/Berlin, 13 September 2013

One of the most exciting questions was at the focus of the IAA symposium that the IKB (Deutsche Industriebank AG) and the German Association of the Automotive Industry (VDA) held at the world’s leading motor show in Frankfurt on Friday. The topic chosen was “The supply industry in the process of internationalisation – future prospects for Germany.” In all probability, there has rarely been such intense discussion from the viewpoints of suppliers and manufacturers on the challenge of internationalisation.

The panel was made up of high-ranking guests: Arndt G. Kirchhoff, CEO of Kirchhoff Holding GmbH & Co. KG; Andreas Müllender, Executive Director Product Purchasing Europe, Adam Opel AG; Jürgen Otto, CEO of the Brose Group, and Dr Stefan Wolf, CEO of ElringKlinger AG. The discussion was chaired by Dr Kurt Demmer, chief economist at the IKB.

Matthias Wissmann, President of the VDA, kicked off by welcoming the numerous guests to the symposium and pointed out that the IAA traditionally attracted a large proportion of trade visitors. This made the IAA not only the world’s largest motor show with the most world premieres, but also a major congress with over 30 specialist events. The fact that the share of foreign IAA exhibitors had risen markedly, to 42 per cent – with the proportion of exhibitors from China climbing especially strongly – was a testament to the increasingly international nature of the industry. “This development promotes our industry – the vehicle manufacturers and the suppliers alike. Internationalisation is essential, and ever more so for our small and medium-sized companies. This is not only because the passenger car manufacturers see their growth opportunities on non-European markets. Of course this offers opportunities for suppliers. However, becoming established on these markets also gives them a considerable head start on their competitors. Our suppliers in particular will benefit from the development of the new markets,” Wissmann underlined.

Andreas Müllender from Opel emphasised that the process of internationalisation was nowhere near complete. Most of the growth in the coming years would occur in the BRIC states, and less in Europe, he explained, adding: “The pressure to produce locally will continue.” He underscored that the passenger car manufacturers needed competent suppliers, especially in Tiers 2 and 3.

Arndt G. Kirchhoff explained that his company had roughly 40 plants around the world, 14 of them in North America alone. He said, “For a quarter of a century we have been pushing forward internationalisation in the Kirchhoff Group.” However, he went on, this was not the case at all suppliers. Every company had to decide for itself if and when it would pay off to have its own production site in one of the BRIC states. This depended not only on market prospects, but also on the legal framework conditions. Joint ventures would not be a suitable approach in every situation for gaining a foothold on new markets. “For small and medium-sized suppliers, clusters or industrial parks may be the right local strategy,” Kirchhoff said. He emphasised that the German suppliers needed open markets, and the increasingly protectionistic measures in many countries were a cause for concern.

Stefan Wolf from ElringKlinger also stressed the opportunities offered by internationalisation: “I definitely support internationalisation. We have 42 sites outside Germany and will continue the process of internationalisation. Our customers, the manufacturers, expect us to do so.” Success on the market was, he added, possible only with quality and technology. Wolf explained that his company had established itself on the Indian market through its own efforts: “We decided not to go for a joint venture there; instead we did it on our own – that was the right way.”

Jürgen Otto, too, sees internationalisation as offering opportunities: “While we in Europe are going into reverse this year, in the USA we will increase by 20 per cent, and our growth in China will be in double figures.” He said it was also necessary for suppliers in particular to have highly efficient logistics: “We are backing ‘just in sequence,’ all over the world.” For small suppliers, however, it did not make business sense to set up their own production plants on all growth markets. A “shop-in-shop” concept, in which these smaller suppliers could be integrated into larger ones, was a promising and relatively low-cost alternative.

 

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