By Viktor Lussi
Sales Director, Wheelabrator
Automotive supply chains are complex beasts – in a highly competitive market. Production locations around the world have to improve constantly in a battle to secure the next model and stay in the game. Over the last decade, we’ve seen that the big car manufacturers won’t shy away from moving huge chunks of production capacity to a different country in or outside Europe.
I’ve been following the car industry’s relocation trends from a Wheelabrator perspective, as our machines are a vital part of automotive production: shot blast equipment is used to treat, peen and clean axles, engine blocks, brake discs, gears, springs, bodywork, and most other metallic car components, either at the car manufacturers’ own facilities or at their suppliers’.
The biggest trend we’ve all seen and felt is the increasing pressure on European manufacturers to establish production capacity in Asia. Customers there prefer local production – not just because production costs are lower, but to avoid the risk of transport damage, and to comply with local import legislation. Automotive OEMs from Europe are encouraged to cluster around the big car manufacturing centres, for example in China, and deliver locally.
Location performance: a complex equation
But the numbers don’t always add up – especially if the complexity of production and equipment is underestimated.
Variations in vocational training and engineering qualifications, as well as degrees, diplomas and apprenticeships that are not globally standardised, can make it difficult to compare workforces and match man to machine.
This can come down to things as simple as the meaning of the word “engineer”, which implies an advanced university degree in many languages, but has a much broader meaning in English.
None of this means that the right skills are not available on the ground in new production locations, just that new equipment might require different skills than the machines it replaces, thereby changing the equation.
Play to your strengths and keep innovating
What this means for automotive production locations around the world is that trends are not inevitable or irreversible, the picture not as clear-cut as you might think. As car manufacturers play this complex numbers game, strengths and weaknesses of different locations around the globe are carefully weighed up against each other. These can be fluid and of varying importance.
Key is to know your strengths in the first place. Germany, for instance, is a market with a long automotive tradition, but due to its high labour costs, many would have predicted the majority of production to have swiftly moved east and towards Asia as global markets opened. German manufacturers reacted by incrementally improving their operations to keep the edge or by investing in highly sophisticated, innovative equipment to make leaps in productivity.
They’ve shown it’s possible to stay in the game by playing to their strengths and keeping on innovating.