Automotive industry - What is actually going on in Germany?

Are the increased foundry insolvencies of the past few weeks a coincidence?

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Thomas Fritsch, Chief Editor

The news of bankruptcies in the German foundry industry are accumulating in recent weeks. For us at Foundry-Planet, a rather unpleasant topic to report about. So, what is going on?

Unfortunate decisions in management, wrong products, inaccurate analyzes, these have always been factors, but typically it's just labeled a market adjustment. While that's bad enough - as bankruptcy always affects a group of people, a region - everything seems to hint at something more at the moment. It is the OEMs, such as Volkswagen, who announce their plan to stop producing combustion engines within a relatively short time, major suppliers such as Bosch, ZF, Continental, Schaeffler or Mahle react quickly and announce grim forecasts and contemplate job cuts, and question continuing business with their suppliers.

Normal crises could be managed, but at the moment everything seems different

In the last big crisis more than a decade ago, there were measures that prevented the worst: reduced hours, part-time workers, reset overtime, temporary shutdowns. These are policies made for the normal crisis. But what is happening in the past months in the automotive industry is not a normal crisis. This time, it's about a change - one the auto industry has not experienced, because much of what is produced will no longer be needed. Engine blocks, cylinder heads, diesel injection systems, pistons, and so much more will not be needed in a few years' time, because it's of a choice being made solely by politicians and auto producers.

Germany, the land of the internal combustion engine, is destroying one of its economic foundations without a care, and taking a large number of well-paid and highly-regarded jobs in the industry with it.

If the politically-desired trend towards e-mobility is now manifesting, one can look forward to Chancellor Merkel's summit meeting scheduled for the beginning of November and expect this will mean a break for German industry to an unprecedented extent and pose an existential threat to parts of the foundry industry. In addition, other well-known and unfortunate economic factors do not make the situation easier.

But could it be different if the German industry - with their associations, unions and employees - showed solidarity and made the power in politics and the automotive industry unmistakably clear that such changes are socially incompatible, and plans for the medium term should be better thought out so that affected companies can adapt.

This also applies to nuclear energy and carbon emissions, as well as energy and climate policy. The foundry industry must now urgently face the challenges, adapt, show and draw the much-needed publicity to the realities of the proposed changes.

Forecast: Even in 2030, 80% combustion engines in new vehicles
Of course, analyst forecasts predict that even by 2030, 50% of all vehicles produced will still have a combustion engine and a further 30% will be built with hybrid drive. Alternative drives and innovative product fields pffer opportunites for the foundry industry.

Changes are unstoppable and make sense for climate protection, but it must not be that a whole industry that provides high-quality products and solutions is irrepairably damaged by a mixture of ideological climate hysteria, obvious fraud in the diesel environment, ubiquitous consumer insecurity, weak managers and despondent politicians.

So whose job is it to tell consumers that they can continue to buy diesel vehicles in the future?
We demand of politics: Tell people that there will be changes, but also tell them that they can buy diesel vehicles tomorrow as well, because they are still the best technology we have! 

Fear is  always a bad companion, so we wish the Germans and the European foundries the confidence to face the challenges with solidarity, and to communicate their interests well with customers, consumers and politics.