CLEPA launches program to help partsmakers adjust to new business conditions

Euro crisis highlights need for suppliers to rethink growth strategies

CLEPA launches program to help partsmakers adjust to new business conditions

Gales: 'European suppliers face some big questions right now.'
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Intense difficulties in local markets are forcing European parts suppliers to rethink their business strategies, to look further afield for growth opportunities and to redefine their business models, according to the European suppliers association CLEPA.

"Growth in the next 10 years will come outside of Europe, with Asia accounting for 80 percent of that. It is therefore paramount that automotive suppliers learn to manage and market their innovations in international markets," CLEPA CEO Jean-Marc Gales told Automotive News Europe.

Since the financial crisis began in 2008, European auto sales have fallen 20 percent to their lowest level since 1993. Throughout Europe carmakers continue to cut costs and there is speculation about further factory closures as manufacturers try to bring capacity utilization back to sustainable levels.

"We expect continued weakness in European component demand, and as a result, both OEMs and especially suppliers will need to adjust capacity," said Marcus Berret of Roland Berger Strategy Consultants, in a press release earlier this month. "This trend will be further accelerated by OEMs shifting their production to the markets where the vehicles are sold. This will continue to create significant problems for Eurocentric suppliers."

European parts suppliers are faced with far more than simply a reduction in demand, Gales says. As automakers become more global they want to reduce the number of suppliers they use and they are expecting those suppliers to travel with them.

Last year, Ford allocated 65 percent of its global purchasing expenditures to companies on its Aligned Business Framework list of 104 preferred suppliers compared to 55 percent in 2010. Furthermore, Ford is planning to reduce its total number of suppliers from the 1,260 it had last December to just 750.

At the same time, the auto industry is struggling to find new ways of attracting younger buyers and the focus on innovation in such areas as electric and hybrid power, enhanced connectivity and automated driving technologies is now at unprecedented levels.

In response to these pressures on its members, CLEPA has developed with Imperial College Business School an executive education module for the automotive industry. The Global Management Program comprises two three-day modules, to be held in London in November 2013 and April 2014, and an optional Shanghai program in summer 2014.

The focus is on helping mainly Tier 1 suppliers address the key issues of innovation, investment and internationalization.

"European suppliers face some big questions right now," says Gales. "In such a rapidly changing environment how can they manage and market innovation of products, processes and business models? How will they finance technological development and geographic balance shift? And how can they grow beyond Europe? Those are all tough issues and this program aims to help participants redefine their business models and future proof their value propositions."

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