The German company Gerhardi Kunststofftechnik GmbH, which survived the invasion of Napoleon, the Great Depression and two World Wars, was brought to its knees by the current automotive recession in Europe. This is reported by Bloomberg.
“Founded in 1796, Gerhardi started producing metal products even before the post-war automobile boom began in Germany. The craftsmanship of injection molding and hot stamping has made it a reliable supplier of grilles, handles and chrome linings for Mercedes-Benz Group AG. But last month, after a prolonged 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 produces a plastic “star” mounted on the grille of Mercedes sedans, is one of hundreds of small manufacturers in the European supply chain of cars that are struggling to stay afloat as automakers reduce production amid low sales and a difficult transition to electric vehicles. Given the planned painful cuts at Volkswagen AG, Stellantis NV and Ford Motor Co., their situation may worsen.
It is noted that the French Forvia SE, which produces 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. However, suppliers associated with electric vehicles, in particular the Swedish battery manufacturer Northvolt AB, are not doing any better either — they are suffocating after governments cut subsidies and sales fell sharply.
This year, European spare parts manufacturers announced the reduction of 53,300 jobs, most of which are in Germany. Given the high energy prices in Europe, bureaucracy and the threat of worsening trade relations with The United States next year looks just as gloomy, said the group’s president Matthias Zink.
“It’s a perfect storm. Companies have invested heavily in anticipation of a surge in sales of electric vehicles, which did not happen,” he said.
According to consulting firm McKinsey, one in five car suppliers expects to lose money next year, after two-thirds reported a margin of 5% or less in 2024.
The slowdown in demand for electric cars is displacing companies that have converted production to serve what they expected to be a steadily growing segment. The German company Webasto SE, which produces, in particular, car roofs and heating systems, is faced with a potential debt restructuring of more than 1 billion euros after significant spending on new products. And although Northvolt’s bankruptcy filing in the United States was the loudest failure, the consequences are spreading — the commissioning of 11 of the 16 planned European battery factories, according to Bloomberg News analysis, has been postponed or canceled.
“The automotive industry is one of the most volatile sectors in the world. Manufacturers are slowing down and shutting down production lines, which has a profound impact on the supply base,” said Andrew Bergbaum, global co—head of automotive and industrial practice at AlixPartners.
In Italy, Stellantis’ decision to stop 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 refused it due to the high price.
“Delgrosso, a manufacturer of filters that supply products to the Fiat factory, went bankrupt earlier this year, laying off hundreds of workers. CLN-Coils Lamiere Nastri SpA, which manufactures wheels and steel body parts for Stellantis, is working with PricewaterhouseCoopers on a restructuring plan due to the closure. Manufacturers of electronics and injection molding parts have resorted to the Italian version of vacations as orders dry up,” the article says.
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 disturbing. We risk losing something that has brought jobs, prestige and shaped the history of our region,” said Marco Gay, president of the Turin Industrial Union, referring to the difficulties faced by suppliers affected by Mirafiori failures.
