To the editor;
I write in response to the article, 'Suppliers confront overcapacity, too' in Automotive News Europe, 2 February.
Excess capacity is a well-known issue, widely debated in the automotive industry.
Vehicle manufacturers, particularly, tend to increase capacity by building assembly plants in new markets. They expect their suppliers to follow them around the globe.
The supplier industry has learned lessons over time, about:
How better to evaluate risks
The need to concentrate on core activities
How the increasing demand for sophisticated equipment and intelligent systems results in horizontal alliances which save them from having to build greenfield plants.
Platform philosophies existed in the supplier industry much earlier than they were applied by vehicle manufacturers. Also, suppliers do not have the same degree of liberty to shed jobs within six weeks of an announcement of cutbacks, as carmakers sometimes do. Therefore suppliers must build networks within the supply chain, which often operates globally.
This networking policy ensures vehicle manufacturers of an intensive transfer of know-how and an exchange of products within those chains.
To strengthen their position and to survive amid global competition, highly innovative small and medium-sized suppliers are gathering in clusters. This allows them to share efforts in research and production, consequently diminishing risks.
There are many examples of such practical, market-driven alliances. They demonstrate a high degree of efficiency and flexibility when adapting at short notice to changes in customer demand.
These networks provide European suppliers with an efficient means of responding to demands for improved quality.
They prove that mergers are not essential in order to meet customers' needs now and in the future.
Networks also help carmakers fulfill their obligations in terms of local content. Such obligations are often given to governments in return for subsidies for job creation in new markets.
This is our understanding of the partnership between vehicle manufacturers and their supply chains. A relationship based on trust and confidence is an absolute must, if we are to meet the 'ups and downs' of the market's requirements, and to match the rhythm of about one new model per manufacturer a year.
European Association of Automotive Suppliers (CLEPA)