Cost-cutting measures make partsmakers groan

VDA supplier spokesman demands a new innovation offensive from the German automotive industry

Luedenscheid, Germany. Suppliers are suffering because of automakers' austerity programs warns Helmut Kostal, spokesman for partsmakers on the board of the German auto industry association (VDA).

"Those programs, which have been given such beautiful names, decrease profit, sales and therefore suppliers' incomes," Kostal criticized in an interview for the 2004 automotive supplier industry report recently published by the VDA.

Saving development costs

Kostal, who is head of German electronics specialist Kostal Group, says he regrets that that suppliers are not sufficiently compensated for the additional costs they face because of carmakers' model offensives and their splitting up of their ranges to create additional vehicles variants. "That is why profits are falling, which in the long term puts the German supplier industry's chance for survival at risk."

Kostal demands that car manufacturers increase their use of identical components concepts. He thinks it is unnecessary to develop components from scratch for every little model variant, the costs for which are then passed on to the suppliers.

Kostal wants automakers and suppliers to start a joint innovations offensive. He says that a similar offensive helped the automotive industry overcomes a drastic drop in sales at the beginning of the 1990s. "I would like this approach to come back to life," Kostal said.

He also forecasts that the current currency and wage cost advantages at locations in regions such as Asia and eastern Europe will soon diminish.

Tags: Suppliers

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