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As we are all aware from extensive media coverage the Automotive industry is the latest casualty of the recession following in the footsteps of Construction and Financial Services. No company or country has been immune from the collapse and the woe’s of America’s ‘Big 3’ were only the start. We are now seeing the likes of our biggest marque’s including Aston Martin, Bentley, Rolls Royce and Jaguar Land Rover making mass redundancies and halting production over Christmas for an extra few weeks only to come back to more doom and gloom and the halting of production in some cases, until mid 2009.
Prestigious brands have been clobbered as much as volume manufacturers and the cause is no mystery. It all began more than a year ago in America with the subprime-lending crisis and then the doubling of oil prices. Buyers found it hard to borrow to buy new or used cars and dearer pump prices set off a trend to swap gas guzzlers for smaller more economical cars. However the real trouble came in November following the financial meltdown of the Lehmann Brothers earlier in the year. Credit systems seized and stock markets panicked. I think all in the industry will agree when I say that the force with which this has hit the industry has been gigantic, a bit like hitting an ice burg! Almost every car maker has a plan, to cease production for the short term, drop shifts and postpone new launches. Offers in showrooms are being used to lure buyer’s but as yet this has not no significant impact, although some manufacturers have reported December 08 figures were up on predictions. IS this the positive we have been hoping for or just a Christmas rush?
How much of the downturn can be attributed to the credit freeze it is hard to say, and the feedback I have been having from my clients is also around customers not wanting to drive into work after having made redundancies in their new car, and rightly so on some counts especially in smaller business where they are very exposed.
But is this now an opportunity for the industry to take stock of its production and re-assess where it is going for the future? Surely it needs to be addressing more complex issues than just customer expectations but those of the larger environmental picture and the fact that in the not so distant future the internal combustion engine will be a limited commodity, if not extinct. Alternative fuels, smaller car will all be topics being discussed amongst Board members and Engineers alike and the cars we see launched over the next 18 months will unfortunately be cars that have been in production and development for 3 or more years so may contain some of the future aspects of the industry but not all.
Some manufacturers are reporting customers looking to modify and make additions to their current cars rather than buy a newer updated model, is this the future for the short term as we have seen in the housing market? Customers extending their properties and improving their kitchen and bathroom rather than move to new home, will customers add sat-nav systems, DVD players and new interiors rather than upgrade to a new car?
I would be very interested to know your thoughts on how the industry can use this as an opportunity to move forwards and improve, and where you think Interims will fit into this? Will we see more Interims in place of permanent staff to move around the industry, maybe with fresh eyes and new ideas?
What does the future hold for the industry longer term and what effect will that have on their interim usage? The next few months will be crucial and with redundancies and some feeling a little uneasy about the state of Automotive there are bound to be resignations and the loss of some key members of staff, so this will prove a challenge in itself if there is a recruitment freeze, so fingers crossed that the industry heads are all aware of the value an interim can bring at such times and the level of expertise that may not currently be available in-house.
To sum up, the Automotive Industry has a tough year ahead. It has had an outstanding period of growth over the last few years but now needs to look to the future and interims will most certainly play a part in that transformation, when and how only time will tell.
February 18th, 2009 at 12:21 pm
As a write there is speculation circulating the internet that SAAB could go bust within days.
Full story here: SAAB Story
GM and Chysler approached congress yesterday for nearly $22bn in state aid and included in their plan was the shedding of thousands of jobs and in Chryslers case dropping three of its model range into the skip of history. Here in the UK production schedules have been slashed at Nissan who have asked the European Investment bank for billions of Euro’s in aid, Toyota, Jaguar Land Rover, BMW (mini), Aston Martin, GM (Vauxhall), Ford and the list goes on.
However, it is important to recognise that this is a necessary paradigm shift and that left to the free market the old dinosaurs of business models have maxed out on their evolution and their time is done. There will be survivors and there will be regeneration and in fact those that act now to maximise their opportunities will be tomorrows market leaders. In addition the UK has experienced a major shift in the value of sterling at a level unprecedented in my lifetime and is now well placed as a low cost economy which has existing infrastructure and skills. Lets hope the meddlers in parliament do not give away the advantage of sterling’s elasticity by railroading us into the Euro.
There is no doubt that there is over capacity in the market, but the world is not about to stop revolving around it’s axis. There will be opportunities for good interim managers to contribute to the streamlining of business, to help purge out bad business practice and drive key metrics and advance the British automotive industry back to the top of the world stage. Our job as Interim’s is to be the best we can be and to lead the way.