The ability to pay in the automotive supply chain is extremely strained due to material price increases, rising energy costs, et cetera. Many suppliers are caught in a liquidity trap and are urgently waiting for deals with their customers. Now, the first automakers are signaling support.
For months, the sheet metal forming (IBU) and solid forming (IMU) industry associations, the German Spring Industry Association (VDFI) and the German Bolt Association (DSV) have been calling for OEMs and system suppliers to take responsibility and come to an agreement in the talks. Now the first automakers are signaling their support: They are offering their suppliers interim financing to make it easier for them to purchase materials and secure their ability to deliver. IBU, IMU and DSV welcome this measure and hope that other OEMs will follow suit in the short term. However, they also emphasize: “This does not ease the situation, however. The suppliers’ customers must also finally accept price adjustments in order to provide the supplier with planning security.”
© IMU
“It is important that other customer groups become active”
IBU Managing Director Bernhard Jacobs is very positive about the willingness of the first automotive manufacturers to enter into talks and find solutions. He hopes that these examples will quickly set a precedent: “It is important that other customer groups – OEMs and system suppliers – become active. But it is also crucial that their concrete offers are acceptable to suppliers.” Here, fair commitment is still lacking in some cases: “Some customers want to negotiate, but hardly want to share any of the additional burden, and in some cases set unacceptable conditions,” is IMU Managing Director Tobias Hain’s impression.
Pain sharing is no longer enough
Of course, each supplier has to reach an agreement with its customers on its own responsibility, but the stability of the supply chain is in the interest of all parties involved. To maintain the ability of suppliers to deliver, it is necessary to pass through all the additional costs in the value chain. “Pain sharing is no longer enough. Many suppliers have seen their liquidity eaten up – not least by the two-year Corona charge. The selling price of their products is in some cases below the material purchase costs,” Jacobs underlines.
OEMs profit: Interim financing maintains delivery capability
The fact is that those who offer interim financing as a quick solution maintain their partners’ ability to deliver – an increasingly important factor in times of increasing bottlenecks in upstream products. “Suppliers may soon only be able to supply customers who help them manage extraordinary costs due to their immense burdens,” said DSV Managing Director Hans Führlbeck. Supply chain finance thus creates a win-win situation for all sides.