French auto supplier association warns sector of losing employment

The French automotive supply chain is facing a dire outlook, according to a stark warning issued by Jean-Louis Pech, the president of the Federation of Vehicle Equipment Industries (Fiev). Speaking at a press conference on Wednesday, Pech painted a grim picture of the sector's future, suggesting that it could see a dramatic reduction in its workforce over the next few years.

Pech highlighted several factors contributing to this potential crisis. Firstly, he pointed to the overall decline in car sales volumes, which has been putting pressure on suppliers. He noted a deceleration in the electric vehicle market, which had previously been seen as a growth area for the industry. Lastly, he emphasised the increasing competition from Chinese manufacturers, which is further squeezing French suppliers.

The gravity of the situation was highlighted by Pech's sobering prediction. He stated that, given the current trajectory of the industry, it wouldn't be an overstatement to suggest that the sector could lose as much as half of its jobs within the next five years. Even more alarmingly, he cautioned that this drastic reduction in employment could occur "very, very quickly."

Thereare someimplications of Jean-Louis Pech's warning, such as:

1. Scale of the Industry:

The French automotive supply sector is a crucial component of the country's manufacturing industry. It encompasses hundreds of companies, ranging from small specialized firms to large multinational corporations, employing tens of thousands of workers across France. The potential loss of half these jobs would represent a significant blow to the French economy and industrial base.

2. Factors Contributing to the Crisis:

a) Declining Car Sales:

The global automotive industry has been facing challenges in recent years, with car sales in many markets, including Europe, experiencing downturns. This decline has been exacerbated by various factors, including economic uncertainties, changing consumer preferences, and the impact of the COVID-19 pandemic.

b) Electric Vehicle Market Slowdown:

While the electric vehicle (EV) sector has been seen as a promising area for growth, its development hasn't been as rapid or smooth as many had hoped. Issues such as high vehicle costs, limited charging infrastructure, and consumer hesitancy have contributed to a slower-than-expected adoption rate in some markets.

c) Chinese Competition:

China has emerged as a formidable player in the global automotive market, particularly in the EV sector. Chinese manufacturers have been able to produce vehicles and components at competitive prices, putting pressure on European suppliers. This competition extends beyond just finished vehicles to include critical components like batteries and electronic systems.