The automotive supply industry is facing a number of challenges in 2024 and 2025, which are characterized by various global influences and regional peculiarities. Below you will find a summary of the most important points, which are based on information from the VDA and VDMA.
Automotive Industry is facing a couple of Global Challenges:
Transformation to electric mobility: The conversion from combustion engines to electric drives requires significant investments and technological adjustments.
Digitalisation: The integration of software and networked services is becoming increasingly important for competitiveness.
Supply chains: Dependence on global supply chains, especially from China, is a risk exacerbated by geopolitical tensions and trade conflicts.
Semiconductor shortage: The automotive industry is heavily dependent on the availability of semiconductors, the shortage of which has already led to production losses.
Regional focus:
Europe: Here, energy costs are 2-3 times higher than competitors in China and the US, which affects competitiveness.
Asia: China in particular is both an important supplier and a large market, the dynamics of which are influencing the global automotive industry.
Challenges according to the VDA and VDMA:
Financing: New financing hurdles due to stricter lending criteria and higher interest rates are making the necessary transformation more difficult.
Innovation: The promotion of research and development is crucial in order to survive in international competition.
Macroeconomic factors: Inflation and geopolitical uncertainties pose additional risks.
The automotive supply industry is undergoing a comprehensive transformation, which particularly affects companies that are active in the following sectors:
Manufacturers of internal combustion engine (ICE) components: These companies face the challenge of adapting to the electrification of the powertrain. According to projections, up to 40 percent of ICE suppliers will have to start a transformation quickly to secure their existence.
Companies with high material costs: Those who invest a large part of their costs in materials for ICE models need to rethink their business models.
Suppliers affected by supply chain disruptions: In particular, disruptions and geopolitical tensions caused by COVID-19 have impacted supply chains.
Companies with imminent credit refinancing: Many suppliers will soon have to refinance loans in an environment where investors are eager to decarbonize.
Companies that need to invest in operational improvements and new business models: These companies are under pressure to optimize their cash conversion while investing in innovation.
The impact on jobs in the automotive supply industry is significant and complex. Here are some key points based on recent studies and forecasts:
Job losses: A study by the ifo Institute predicts that at least 178,000 jobs in Germany could be affected by 2025, especially in the medium-sized supplier industry.
Transformation: The shift towards electromobility and digitalization is leading to a change in the required qualifications and thus to a change in the workplace landscape.
New occupational fields: It is expected that completely new occupational fields will be created for 70,000 jobs and a further 200,000 jobs will change significantly, which will entail a considerable need for further training.
Regional differences: In eastern Germany, ten percent more jobs could be created, while in southern Germany the job development remains constant.
These developments require companies and policymakers to actively shape the transformation to mitigate the impact on employees and support the transition to new technologies and ways of working.
The apparent contradiction between job losses and the simultaneous shortage of skilled workers in the automotive supply industry can be explained by several factors:
Structural change: The industry is undergoing a profound change, away from traditional combustion engines and towards electromobility and digitalization. As a result, certain qualifications are no longer in demand, while at the same time there is a high demand for new, specialised specialists.
Skills gap: There is a disconnect between the skills offered by workers and the skills needed by companies. Many existing jobs require retraining or upskilling to keep up with technological changes.
Demographics: Many developed countries have an aging population, which leads to a natural decline in the labor force. At the same time, many experienced professionals are retiring, which exacerbates the shortage of qualified personnel.
Regional differences: While some regions are reducing overcapacity and losing jobs, others have a growing need for skilled workers, especially in technology and innovation hubs.
Global competition: International competition for talent is further exacerbating the shortage of skilled workers. Highly qualified specialists are in demand worldwide and can often choose between various international offers.
These factors combine to create a complex labour market situation in which, despite job losses in certain areas, there is a shortage of skilled workers in other, future-oriented areas. To meet these challenges, targeted education and retraining programmes are necessary, as well as a flexible adaptation of the workforce to the new requirements of the industry.
Companies can manage the skills shortage through a combination of internal initiatives and external strategies. Here are some measures that have proven to be effective:
Training and courses: Companies can set up their own academies and offer specialised courses to upskill employees and attract new talent.
Targeted training: Modern training and targeted training are crucial to equip the workforce for the challenges of the future.
Raising labour potential: The shortage of skilled workers can be counteracted by increasing labour force participation and exploiting all labour potential.
Improving the quality of work: A modern work environment and a positive work culture can help attract and retain skilled workers.
Modernising immigration: Attracting and integrating skilled workers from abroad can help meet the needs.
Social recruiting: Using social networks for recruitment can help companies reach a larger audience and target potential candidates directly.
Flexible working time models: New working time models such as the four-day week can be attractive for skilled workers and contribute to employee retention.
These strategies require a proactive approach and a willingness to invest in employees and company culture. In addition, it is important to create a policy framework that promotes further training and facilitates the immigration of skilled workers.
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