The German company Gerhardi Kunststofftechnik GmbH, which survived Napoleon’s invasion, the Great Depression and two world wars, has been brought to its knees by the current automobile recession in Europe. Bloomberg reports that.
“Founded in 1796, Gerhardi began making metal products before Germany’s postwar auto boom began. Its mastery of die-casting and hot stamping made it a trusted supplier of grilles, handles and chrome trim for Mercedes-Benz Group AG. But last month, after a protracted period of rising costs and withering demand, the company filed for bankruptcy, plunging its 1,500 employees into an uncertain future,” Bloomberg reports.
Gerhardi, which makes the plastic “star” mounted on the grille of Mercedes sedans, is one of hundreds of small manufacturers in Europe’s automotive supply chain struggling to stay afloat as automakers cut production amid weak sales and a difficult transition to electric vehicles. With painful layoffs planned at Volkswagen AG, Stellantis NV and Ford Motor Co. their situation could worsen.
It has been noted that France’s Forvia SE, which makes components for Stellantis and Volkswagen, is cutting thousands of jobs as the transition to electric cars makes traditional products such as transmissions and exhaust systems obsolete. But suppliers linked to electric vehicles, notably Swedish battery maker Northvolt AB, aren’t feeling any better either – they’re gasping for air after governments slashed subsidies and sales plummeted.
European parts makers have announced 53,300 job cuts this year, most of them in Germany. With high energy prices in Europe, bureaucracy and the threat of worsening trade ties with the United States, next year looks just as bleak, group president Matthias Zink said.
“It’s a perfect storm. Companies have invested heavily in anticipation of a surge in electric car sales, which hasn’t happened,” he said.
One in five auto suppliers expect to lose money next year, after two-thirds reported margins of 5 percent or less in 2024, according to consulting firm McKinsey.
Slowing demand for electric cars is squeezing out companies that retooled production to serve what they expected to be a steadily growing segment. Germany’s Webasto SE, which makes car roofs and heating systems, among other things, is facing a potential debt restructuring of more than €1 billion after spending heavily on new products. And while Northvolt’s bankruptcy filing in the U.S. was the most high-profile setback, the fallout is broader – the startup of 11 of 16 planned European battery plants has been delayed or canceled, according to a Bloomberg News analysis.
“The auto industry is one of the world’s most volatile sectors. Manufacturers are slowing down and stopping production lines, which is having a profound impact on the supply base,” said Andrew Bergbaum, global co-head of the automotive and industrial practice at AlixPartners.
In Italy, Stellantis’ decision to halt production at its Mirafiori plant has affected the entire supply chain. Stellantis has repeatedly had to suspend production of the electric version of the Fiat 500, which it introduced four years ago, as customers rejected it because of its high price.
“Delgrosso, the maker of filters that supply the Fiat plant, went bankrupt earlier this year, laying off hundreds of workers. CLN-Coils Lamiere Nastri SpA, which makes wheels and steel body parts for Stellantis, is working with PricewaterhouseCoopers on a restructuring plan because of the shutdown. Electronics and die-casting parts makers have resorted to an Italian version of furloughs as orders dry up,” according to the article.
Last month, Ford Motor Co. announced plans to cut another 4,000 jobs in the region, while Volkswagen is in the midst of a historic restructuring of its namesake brand to cope with increasing competition and high costs.
“This is deeply worrying. We risk losing something that has brought jobs, prestige and shaped the history of our region,” said Marco Gay, president of Turin’s Industrial Union, referring to the difficulties faced by suppliers affected by the Mirafiori disruption.
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