A current study by the Chemnitz Automotive Institute (CATI) has highlighted the need for action in medium-sized supply companies, in particular in eastern Germany.
The German automotive industry is literally bursting with international competitive ability. 90% of vehicles produced worldwide with a German brand logo are destined for foreign markets. This highlights the sector’s outstanding international competitive ability, but it is also an indication of immense dependence. ‘The risk for domestic locations and workplaces is not that suppliers are increasingly moving their production abroad, but rather that the successful model derived from overseas production and export is not continued unbroken in the same way for all involved’, according to Prof. Werner Olle, a member of the Board of Directors of the Chemnitz Automotive Institute (CAT), in the recent study entitled ‘Investment Follows Growth’.
For automotive manufacturers, the proportion of all production (by value) completed overseas is 40% in the premium segment (BMW/Daimler) and as much as 80% in the volume segment (Volkswagen cars). ‘Automobile manufacturers produce in markets where demand is still experiencing a sustained increase. This is no longer the case in traditional industrial countries such as Germany’, explains Prof. Olle. Over the past two decades, overall this internationalisation has not damaged domestic automotive sites but has instead provided them with sustainable support via expanded deliveries, new export opportunities, and also the ability for hybrid costing.
And the supply industry? ‘All large German automotive suppliers – from Continental to Mahle and Brose to Dräxlmaier and Webasto – who claim high global market shares in specific product areas as a result of innovation leadership have long since become global champions, and have even outstripped automotive manufacturers in their degree of internationalisation’, argues the author of the CATI study. On average, around 65% of employees in companies are already working abroad.
However, at the other end of the supply pyramid among small and medium-sized companies, CATI has identified a considerable need for action. ‘Export quotas significantly below average, target markets predominantly in the euro zone, extremely small commitments in their own country – this picture becomes even more negative for the supply industry in the new federal states’, in Prof. Olle’s assessment. ‘Nevertheless, we do not expect any serious consequences within the timeline to 2020. However, if globalisation still fails to progress among medium-sized companies, there will be unavoidable risk for domestic sites and workplaces. This potential risk is particularly high for medium-sized supply companies in the new federal states’, is Prof. Olle’s cautionary conclusion.
‘This study has come at the right time, as progress in internationalisation requires sufficient forward planning’, adds Prof. Christoph Igel, also a member of CATI’s Board of Directors and Director of TU Chemnitz education (TUCed) at TU Chemnitz. CATI’s latest study also arrives in time for the run-up to this year’s Automotive Cluster of East Germany (ACOD) conference on 15 July at the Porsche factory in Leipzig, with the slogan ‘Internationalisation in the Automotive Supply Industry’.
Keyword: Chemnitz Automotive Institute (CATI)
Founded in 2015, the Chemnitz Automotive Institute (CATI) headed by professors Dr. Egon Müller, Dr. Werner Olle and Dr. Christoph Igel is developing an independent profile and focusing on structure-based needs in the automotive industry arising from the three key challenges of internationalisation, innovation and demographic change. Building on this strategic orientation, CATI initiates, conducts and pools research into the fields of automotive economy, automotive factories and automotive logistics, focusing in particular on developing, testing and transferring process innovations.
Due to the major importance of innovation and knowledge transfer, the Chemnitz Automotive Institute has been integrated into an institute affiliated to TU Chemnitz (namely TU Chemnitz education, TUCed GmbH) as an independent division. This setup also enables close connections with other institutes at the university, including the Institute for Management and Factory Systems. CATI collaborates with numerous practice partners, the German Association of the Automotive Industry (VDA) and the Automotive Cluster of East Germany (ACOD) as industry representatives, as well as with representatives of various applied research institutions.