THE SLOVAK automotive suppliers’ market remains a highly dependent industry sector, and this dependency was good for business in 2012. The sector continues to benefit from supplies to customers in western Europe, but more importantly, enjoys growing demand from Slovak, Hungarian and Czech-based car manufacturers. The former is the basis for its mid-term stability in the market, and the latter resulted in enormous growth for most suppliers in 2012.
These are the main findings of the Automotive Suppliers Survey, which PwC conducted in cooperation with the Automotive Industry Association of the SR with participation from 43 car suppliers operating in the Slovak market. They replied from February 13 to March 25. The survey focused on the current situation, key factors and the outlook for the coming years in Slovakia’s car supplier industry.
Two thirds of respondents confirmed that the year 2012 was slightly or much better than 2011, which is in line with the boost in production in Slovakia and growing demand in eastern Europe and Asia. The survey stressed that besides 51 percent of responses confirming volume driven growth, 33 percent of the companies improved mainly due to efficiency measures and cost reduction programmes. However, 29 percent of companies recorded a worse financial position than in the prior period as a result of a drop in sales volume or prices.
A positive conclusion is the relationship between revenue trends and workforce changes.
Approximately half of the firms that grew by more than 10 percent recruited only 5–10 percent more staff. On the other hand, firms with declining revenue were more flexible and could adjust their workforce in line with production changes.
Another common and very promising result of the survey is that the key competitive advantages of suppliers are in non-financial areas – product quality, highly qualified labour and long-term relationships. These areas scored 50–77 percent, compared to product pricing and manufacturing costs representing 30–37 percent of responses. However, the survey shows that only 23 percent of respondents consider innovation to be a competitive advantage for their business, although considered to be key for future success.
The suppliers remain optimistic for 2013. Almost half of respondents expect their revenue to grow by more than 5 percent and by more than 10 percent, whereas one third predict stable business without any growth potential. These optimistic expectations are in contrast to the expectations of 72 percent of respondents who foresee customer pressure on prices and a decreasing demand for cars.
Respondents listed three main areas that could improve the automotive industry sector, including changes in the educational system, improved infrastructure and changes in the legislative environment.