The manufacturing industry is in the spotlight. On the one hand because quality really does turn out to be an added value that cannot be underestimated, and on the other because Dutch sectors have continued to develop and focus more on solutions than products. A year ago, ING stated that this offers great opportunities for the Dutch manufacturing industry. The automotive sector seems to be grasping those opportunities with both hands, judging by the number of successes reported in this in recent months. "The Netherlands is back on track when it comes to automotive manufacturing," ING said.
Explosive growth
The automotive industry has grown enormously in recent years, by 18% in 2015, 19% in 2016 and the outlook for 2017 is no less than 20% growth! Sales are heading towards €14 billion in 2017. Set against an expected industry growth rate of 2% overall, the automotive sector stands out in a very positive light.
The Netherlands is a small player in the global automotive industry but the reopening of Nedcar, and its expansion last year, also boosted supply in that sector. But not only Nedcar, truck production is also doing well. And with a bit of luck, we will see Tesla opt for a production site in the Netherlands. Our country is known for its progressive knowledge and its application of it. Both manufacturers and suppliers are engaged in knowledge-intensive technologies. The renowned manufacturers in the automotive industry see this as an opportunity to be one step ahead of the competition. They look for the gems and find them.
Automotive supply
That supply concerns quite a few sectors. Apart from the automotive components industry, it concerns the chemical, rubber and plastic industry, metalworking and all suppliers to those industries. Including, as mentioned, advanced technologies, such as inductive heating for the assembly of gearboxes, to SMED systems (Single Minute Exchange of Die - derived from the lean manufacturing philosophy of the Toyota Production System) that ensure higher productivity and more safety in plastic and metal processing. Many supplying companies are long-term players in the automotive chain and innovate along with the car manufacturer. They thus create a strong competitive position and have been able to benefit from the growth of automotive in Germany and, to a lesser extent, England and the United States.
Export
We therefore see that exports in particular are making a huge contribution to explosive growth. Constant innovation and the resulting good competitive position has enabled the automotive industry in the Netherlands to respond to foreign demand. Sales in the Dutch market continue to develop moderately, but export growth is huge, from both suppliers and manufacturers. The production of the Mini Hatch, Mini Cabrio and Mini Countrymen in Born is intended for sales all over the world. In addition, DAF managed to increase its European market share from just below 15 per cent to just above 16 per cent in the period 2015-mid-2016. Total exports of the Dutch automotive industry are expected to double the 2012 level in 2017.
The ING researchers also point to growing car sales in Europe, which is driving production in Germany, among other countries. This also benefits parts suppliers and other industrial sectors. For instance, the Dutch chemical and electro-technical industries each supply more than a billion euros to the automotive industry and (base) metals almost two and a half billion euros. Many Dutch suppliers are focused on the German market. Until recently, the industry obtained 44% of its export turnover from large customers such as Volkswagen, BMW and Daimler.
Collaboration
An important development within the manufacturing industry in general is the shift from a maintenance model via a service model slowly towards a circular model. And this creates opportunities for manufacturers to "move up" in their business model, from production to service. Users want relief and flexibility.
More and more car manufacturers are cooperating with each other. This trend has continued among system suppliers. As a result, suppliers deeper in the supply chain also have to consider more explicitly than before their position in this chain and the role they can play for their customer.
In the automotive industry, heavy demands are made on suppliers. Not only in terms of price, quality, logistics and delivery reliability, but also in many other areas, such as product development, suppliers must always be able to deliver. This requires specialisation that makes automotive suppliers consciously choose this industry as their customer. As a result, they realise a larger share of their total turnover in this sector.
This development also increases their need for cooperation and knowledge sharing. We see this reflected in the industry associations. NEVAT has set up a market-oriented sector group Holland Automotive with some 35 member companies. At other associations, too, interest representation is increasingly focusing on the formation of market-oriented clusters.
Holland Automotive unites Dutch suppliers of complete systems, subsystems, modules and specific products and operations. From raw materials to metal, plastic, electro-technical and electronics components.
Producer confidence
The confidence of manufacturing entrepreneurs as a whole has grown steadily in recent years. At the beginning of 2017, that score reached 6.0. With this, the mood indicator of industrial entrepreneurs reached its highest level since March 2008. Positive sentiment has dominated continuously since the beginning of 2014.
This score is built on three sub-areas: expected activity, opinion on order position and opinion on inventories. The increase in confidence is mainly due to the improvement in judgements on order position and inventories. Production expectations decreased slightly compared to the beginning of the fourth quarter of 2016, but are nevertheless still substantially positive.
Knowledge, cooperation and trust. That should work out well!
By: Janet Kooren
Photo: Pixabay
