|SOUTH-EAST EUROPEAN INDUSTRIAL МARKET » South-East European INDUSTRIAL Мarket - issue 4/2015, NOVEMBER
Automotive manufacturing and R&D sector in Slovenia and Romania
Automotive industry is a key industrial sector of the European economy, including the South-East European region. The development of the industry includes intensive R&D activities, growing innovations and strong focus on education. R&D is more and more among the high competitive advantages for industrial firms. According to the study "Innovation Trends and Challenges and Cooperation.
Possibilities with R&D in Automotive Industry" by the international cooperative network of educational and research institution with subcontractors and other bodies active in the automotive industry ACSEE Autoclusters, the automotive sector in Europe is the most important employer in comparison with other industrial sectors. High automotive R&D expenditure per year (app. 20 bln. eur) is observed in the region.
ACSEE Autoclusters reports that there are more than 300 automotive production and assembly plants in Europe. The companies in the SEE automotive manufacturing and R&D sector may be divided into three main groups: global world car producers, which establish productions and research and development centers in the SEE countries, local national car producers and special car producers.
R&D capacities in SEE
According to ACSEE's data there are over 200 R&D organizations in South-East Europe. The most numerous and developed among them are in Slovenia, followed by Croatia. In Slovenia there are mainly technological development centres, followed by engineering services centres and university centres in the automotive field. Romania has 6 technological development centres. In Croatia and Serbia there are mostly university centres.
Divided by industry sector orientation, the research and development centres are focused on:
electronics and electrotechnical engineering, hydraulics and pneumatics, group manufacturing technologies, mechanical engineering and mechatronics, group material research and chemistry, centres in group vehicle design, product development and prototyping, etc.
In Romania for example, R&D activities are mostly dedicated to the following fields: electronics and electrotechnical engineering, hydraulics and pneumatics, vehicle development, product development and protoytoping.
In the current issue of South-East European Industrial Market we present an overview of the automotive manufacturing and R&D sector in Slovenia and Romania. The upcoming issue of the magazine (1/2016) will introduce you to the development of the sector in Croatia and Serbia.
Automotive traditions in Slovenia
Slovenia has a long industrial tradition. From the beginning of the automotive industry at the end of the 19 century, Slovenia has been following its development and has been providing technical and researchable contribution, ACSEE reports. Gradually Slovenia has strengthened the economic purpose of the automotive industry in the national economy.
The first industrial production of buses in Avtomontaza in Ljubljana started in 1936. This factory was one of the first in Europe that manufactured buses with steel body work. The upturn of production of industrial vehicles, first trucks, later also buses, followed after the end of the Second World War, in the early fifties in Maribor.
TAM Factory of Automobiles Maribor manufactured vehicles and motors under licence and cooperational contract with Deutz from Germany. This production had a major influence on production of component parts or components, first in Maribor, then in Slovenia and other areas of former Yugoslavia.
The production of personal vehicles in 1959 started in Novo mesto with the establishment of IMV Industry ofmotor vehicles (already in 1954 the production of delivery vehicles started). The production of personal vehicles DKW started first, followed by the production of BLMC vehicles and from 1972, they have been producing vehicles Renault. Since 1960 at TOMOS in Koper personal vehicles Citroen were assembled.
After that extensive production of automotive parts began; first for Citroen and later for other global vehicle manufacturers and system suppliers. After Slovenia became independent in 1991 the production of commercial vehicles was significantly reduced after the loss of markets in former Yugoslavia and other eastern markets and due to transitional deindustrialisation. The production of automotive components, especially for personal vehicles, transferred most of its production to Western European markets, especially to Germany and France.
Today there are more than 220 companies in the Slovenian automotive manufacturing and R&D sector which employ approximately 16,000 workers, the local AJPES agency reports. The annual revenues of the branch (in EUR) are around 3.3 billion, and the exports (in EUR) amount to 2.9 billion. Among the key export markets: Austria, Croatia, Hungary, France, Germany, Italy, Mexico, Romania, Spain, Turkey, UK, USA, etc.
Key products and solutions for the automotive sector, developed and manufactured in Slovenia, are: seats and seat components; components and materials for interior furnishing; car body parts;
components for braking systems; mechanical and electric/electronic components for engines; exterior equipment and body lighting equipment, etc. Local and foreign companies situated in the country also produce: exhaust systems; engine and gearbox components; steering system components; drive components; other systems and components; manufacturing spot welding equipment; tooling for automotive industry and procure research, testing and other development activities.
The structure of the automotive industry in Slovenia
ACSEE reports that the Slovenian automotive suppliers industry includes about 100 producers that can be mainly defined as Tier 2 and Tier 3 suppliers. There are also Tier 1 system suppliers of pedal boxes, gear shift mechanisms, braking systems and other assemblies at CIMOS, auto-electric equipment at Iskra Avtoelektrika, ignition systems and electronics at AET, seats at TPV, bowden cables at TBP, headlights at Hella Lux.
The buyers of components for the first implementation from Slovenia are VW, BMW, Audi, DC, MAN, Bosch, Ford in Germany, Renault, PSA, Brose in France, Lombardini, Landini, Fiat in Italy, Magna Steyr, Grammer in Austria and many others, also in England, the USA, Spain, Hungary and many other countries. These companies have an intensive development in introducing automatic systems into the production process and they are also flexible in adjustments to customers' needs.
The Slovenian automotive supply industry's annual turnover exceeds 3,7 billion Euros, 80% of which comes from the export of goods and services to the EU and rest of the world, Together with car production in Revoz it represents approx. 20% of the complete Slovenian export and 6% of DPH. In 2008 Slovenian suppliers spent over 3% of sales turnover for R&D and invested 12% of sales turnover into new technology equipment in average.
Buyers and export
The sector today is also represented by the production of personal vehicles Renault in company Revoz where 900 Clios Storia and Twigos are produced per day and a well developed automotive suppliers industry with about 100 big, medium-sized and small companies that are followed by over several 100s specialized small companies that they cooperate with. The production of commercial vehicles has been becoming more active and has been gradually spreading its suppliers' network.
The production of personal vehicles represents about 9% of the overall value of goods and services export form Slovenia. The production of component parts or components for automotive industry (and accessories) reaches the value over 1,5 billion EUR, from that value around 80% is exported, which is close to 10% of Slovenian export of goods and services.
Buyers are car producers and system suppliers in EU are Germany 40%, France 21%, Italy 8%, Austria 6%, England 6%, USA 4%, Spain 3%. Export of buses and other economy vehicles is around 30 million EUR. Over 140 million EUR represent the export of special tools and machines and investment and supporting services for the automotive industry in EU.
Economic impact and investments
According to ACSEE, the whole section of automotive industry, vehicles and production of automotive parts, has directly involved around 27,500 employees, it represents 19% of all export of goods and services of Slovenia and it creates 6% GDP (indirectly more than 100,000 employees). The automotive section is above average in the field of investments, especially in investments into new production technological equipment, which guarantees the quality of vehicles and components and also assures high productivity.
The competition due to relatively high labor force price (salary and other obligations that employers have) in comparison with the competition in Central and Eastern Europe (Czech Republic, Hungary, Poland, Slovakia) is achieved by Slovenian automotive and automotive component parts' producers by using high technology, innovation and labor force quality.
Investments into "soft factors", are particularly high especially investments into training and extra qualifications of the employees (learning companies), into motivation of the employees and into efficient organization and managing quality. Numerous producers of automotive components have already obtained global certificates ISO TS 16949 (3/4 of ACS members).
Before that they already had, because of their export intensity, VDA 6.1, EAQF and QS 9000. Big investments are also meant for the welfare of the environment, in accordance with strict EU regulations that Slovenia obeys; therefore numerous companies in automotive section have already acquired environment certificates ISO 14001.
Automotive research and development
The planning and introduction of a new product is a time-consuming process that can take years and even decades, therefore the expenses connected to this process are extremely high and for this reason the realisation of such a project is only possible in cooperation with the researchers (developers) from the company with external research institutions that have the knowledge. In all this the "available technological" environment and available sources are of key importance.
In the Slovenian automotive industry the research and development are directed towards the market requirements and the increase of profit. Slovenian automotive industry is doing business under pressure of fast changes and therefore it has limited resources for the research and development which is then supplemented by using the resources from universities. Currently more than 1,000 registered researchers are connected with the Slovenian automotive industry at faculties, independent R&D institutes and R&D centres in the companies.
Universities, research institutions and associations performing activities in the automotive field are: University of Ljubljana, Faculty of Electrical Engineering; University of Ljubljana, Faculty of Mechanical Engineering; University of Maribor, Faculty of Electrical Engineering and Computer Science; University of Maribor, Faculty of Mechanical Engineering; ACS - Automotive Cluster of Slovenia; TECOS - Slovenian tool and die development centre; Tool-making cluster of Slovenia; Car industry institution RTC; Slovenia Partner, Development Group for Vehicles, Transport & Logistics, etc.
Automotive industry in Romania
The beginnings of the automotive industry in Romania have their roots in the interdictions imposed to the Romanian aviation industry at the end of World War II. The new industry started at the beginning of the 1950s and has grown and diversified since the 1970s especially. It included manufacturers of tractors, trucks, buses, off-road vehicles and cars.
Romanian Automotive Industry in the last decade
Romania's automotive industry has grown rapidly since 2000, with sales of 180,927 units in 2004, up from 84,170 units in 2000. The passenger car industry is the most important segment of the market, with 80% of total sales in 2004. Vehicles manufactured in Romania accounted for 67.5% of total sales in 2004 (down from 92.9% in 2000).
Romania's top vehicle maker was Dacia, owned by Renault of France, with 44.2% share of total sales in 2004, followed by Daewoo Automobile Romania (15.1%), owned by Daewoo of the Republic of Korea. Relatively low labor costs, and unimpeded access to the European automotive market are some of the main reasons for the relatively high penetration of foreign firms into Romania's automotive subsector, including autoparts.
Overall market review
The auto industry employs 3.5% of workers in the manufacturing sector. Romania has different customs valuation rules for new and used motor vehicles, including cars, all-terrain vehicles, trucks, motorcycles, and trailers. Romania has revitalized its automotive industry, mainly by attracting foreign direct investment, through inter alia, incentive schemes, including state aid granted to Dacia and lately Ford.
Some other companies, such as Daewoo, became eligible for exemption of customs duties, and tax holidays on profits, producing with a Romanian content of at least 50%, and exporting a minimum 50% of annual production. These incentives were eliminated in 2002. In addition, Daimler is planning to establish a manufacturing venture in Romania, also in the mini- and small car segment. Given these developments, the Romanian car industry will witness a major boost over the next year, ACSEE reports.
Romania's role in the European automotive industry
As production was moving towards Eastern European countries Romania's role in automotive industry has steadily increased. This was possible based on the
following factors: Romania had and still has one of the lowest production costs in Europe; investment in production facilities in Romania leads to a stronger market presence in Europe for non-European companies and presence in Eastern Europe and proximity of ex-Soviet countries for European and non-European companies. Opening car production and automotive parts in Romania increased competition and lead to continuous price reduction in the small and medium car segment. Renault continuous process of cutting costs (through Dacia models) increased the operation in Romania in order to stay competitive.
Research and development
A big amount of R&D is outsourced by foreign companies to local subsidiaries opened in Romania. Dacia has started to outsource some of its R&D activities to suppliers and many foreign suppliers have established R&D and production activities in Romania in order to meet Dacia's demand. In the commercial vehicle industry sector there was no globalization of the vehicle production though some attempts were made to sign strategic collaborations with important foreign companies.
The present Romanian production of commercial vehicles is low and strictly oriented to the local market. Increased competition from abroad has reduced significantly the sales of Romanian commercial vehicles. Large commercial vehicle producers were considering the possibility to open production facilities in Romania. Exploring the possibilities to find suppliers in Romania, these initiatives provide opportunities for T1 suppliers to start operations in the country.
The Romanian car parts industry has experienced rapid expansion over the last five years as several large foreign parts producers established production plants in the country. The automotive industry in Romania had until recently two large foreign vehicle makers, Daewoo and Renault. Numerous parts production plants have opened in to support these facilities. 58% of the spare parts used by Daewoo were domestically produced and Daewoo co-operated with 226 Romanian producers who supply more than 1,000 parts. The Romanian automotive supplier sector has followed the evolution of the car producer in Romania.
The major car production facilities located in Pitesti, Craiova, Brasov and Bucuresti has concentrated most of the supplier companies. These companies had to face the changes car producer went through. Before 1990 all suppliers were producing for national car producers in Pitesti, Craiova, Brasov, Bucuresti, Campulung and Timisoara. When Romania started to open to foreign investors, a lot of Western European and international automotive suppliers have open subsidiaries in Romania based on the existence of a relatively skillful but cheap working force.
The current situation provides excellent opportunities for suppliers of all tiers. Ford is partly looking for a new supplier network and Daimler will also be looking for low-cost but good quality suppliers to support their strategy. Currently, the Romanian automotive industry consists of a limited number of players (as compared for example with Poland).
Етикети: Automotive industry ACSEE Autoclusters electronics and electrotechnical engineering hydraulics and pneumatics vehicle development TAM Factory IMV Industry DKW BLMC TOMOS Citroen CIMOS Iskra Avtoelektrika AET TPV TBP Hella Lux VW BMW Audi DC MAN Bosch Ford Renault PSA Brose Lombardini Landini Fiat Magna Steyr Grammer Dacia Daewoo Automobile Romania