Spanish automotive components manufacturer Gestamp has warned that the downturn in Europe's automotive industry could have far-reaching consequences for other industries, including steel, amid increasing competition from Chinese automakers.
Speaking in an interview with the Financial Times, Francisco Riberas, chairman of the Board of Directors and founder of the company, said that the European automotive industry is facing a serious challenge: Chinese manufacturers are strengthening their positions in the electric vehicle segment, and car production in Europe continues to decline. According to him, the production of machinery in the region has decreased by 20-25% since 2017, when the global industry reached its peak.
The automotive industry supports a broader European industrial base.
Riberas stressed that the automotive industry plays a key role for a number of related industries. He warned that the loss of automotive production could weaken the entire industrial base of Europe. Currently, the industry accounts for about 7% of the region's GDP, as well as almost 14 million jobs.
According to the head of Gestamp, Europe should be open to Chinese investments in the automotive industry, but such projects should create local production and employment throughout the supply chain. He noted that Chinese automakers operating in Europe are still heavily dependent on the supply of components from China. At the same time, Gestamp has so far only a limited number of contracts with Chinese brands that produce cars in Europe.
Riberas said that Chinese companies should increasingly use local components. Otherwise, he said, simply assembling cars in Europe from imported components would undermine the European value chain.
He recalled that traditionally, one workplace at an automobile plant provides three more jobs in related industrial sectors. In addition, Riberas drew attention to the difference in financing conditions, arguing that European car companies are in a less favorable position compared to their Chinese competitors, who, according to him, have access to cheaper capital.
Gestamp supports the EU Law on Accelerating Industrial Production.
Against this background, Riberas expressed support for the EU's proposed Law on Accelerating Industrial Production, which, according to him, should give the European industry time to increase competitiveness. The project provides for a 70% threshold for localization of automotive components for investments applying for subsidies or government contracts, as well as stricter control over foreign direct investment from China in excess of 100 million euros in a number of