PRAGUE -- In a steamy foundry behind a century-old Czech brewery, a mechanical arm pours molten aluminum into a two-story robotic mold. Within seconds, gleaming pump covers for diesel engines roll out for inspection.
The state-of-the-art production line at Motor Jikov Group in Ceske Budejovice, near the border with Germany and Austria, is running at full speed to deliver orders to Volkswagen Group’s Scania truck unit.
But the upgrades that cost millions of dollars represent more than the success of a well-run midsize business. Executives see them as a matter of life and death in a cutthroat industry gripped by existential dread.
More than a hundred companies like Motor Jikov are scattered across the Czech Republic, a stronghold of the European auto industry and a pillar of the national economy. They serve factories that build cars powered by combustion engines -- and are squeezed by the rise of electric mobility.
“It’s a question of which companies are capable of surviving,” Motor Jikov General Manager Miroslav Dvorak said. “For us, this means foremost a huge investment, in order to reach the level of a completely new type of products.”
The Czech Republic and Slovakia, its former federation partner, make more cars per person than any other country in the world. The vast web of component-makers employs almost twice as many people as the car factories themselves.
Attracted by a cheap skilled workforce and proximity to major European markets, foreign investment has built up an industry that churns out millions of cars carrying the Volkswagen, Skoda, Hyundai, Kia, Peugeot and Land Rover logos.
The shakeup of an industry dominated by traditional cars for 120 years is pitting the suppliers against each other, in competition for a shrinking order book.
Ultimately, this tectonic change will force them to replace about half of their total output, according to Dvorak. Sales of Czech car-parts makers were 460 billion koruna last year ($20 billion), of which three-quarters were exports.