Car manufacturers stay silent:Supplier associations in turmoil

Several associations representing mainly medium-sized suppliers are sounding the alarm: because car manufacturers do not communicate their requirements, there is no basis for planning. This is how explosive the situation currently is for machine and plant manufacturers and the producers of tools and chucks.

"The market is in turmoil. The current situation has high drama potential for many companies". "Powerful OEMs are playing their cards in the market, and they fail to realize that the livelihoods of medium-sized supplier companies are at stake - and thus also their supply chain." The situation leads to considerable planning problems and high additional costs. Banks reacted hesitantly to provide bridging loans, which SMEs need to finance their steel purchases.

Suppliers usually conclude customer negotiations in the year's first half, and they only took place in isolated cases in the autumn. The higher the price difference, the more decision-making hierarchies are involved on the customer side. "The business behaviour is different in that it makes a huge difference for the companies whether they have to pass on material prices of 30 euros per tonne or 300 euros per tonne. If a company processes 10,000 tonnes a year, this difference cannot be borne by a medium-sized company.

The procurement risk for steel lies with the supplier
The dilemma is that the pre-material suppliers are now expecting volume orders for the next year without naming prices. The automotive customers, on the other hand,' 'are silent, ignore requests for talks and also postpone alloffs at short notice - due to production stops caused by chip shortages. All these undermines any planning," the joint statement says. They call on the carmakers to seek dialogue with the suppliers. Two carmakers in particular, which the associations do not wantto name, stand out negatively.

The high steel prices and raw material shortages aggravate the situation, the associations state. In addition, the goverment supports the EU market closure, which restricts imports from third countries. Reliable price and quantity agreements with the buyers of their automotive customers are all the more critical for the planning security of SMEs. The associations also criticize carmakers for postponing acceptance at short notice. They cited force majeure due to the shortage of semiconductors.

Some associations also criticize the way business is done when it comes to prices. If customers respond to the "justified demand for price increases," then only late or proportionately. "Cancellations or postponements by customers of schedules due at short notice also lead to considerable additional costs for companies, which are not reflected in any calculations."

Font: ETMM