Auto parts factories in Lithuania are returning from downtime: bigger changes expected in autumn

Greater recovery: only in autumn

Darius Lasionis, the head of the auto parts group, told Delfi that the current situation in the market is such that with the start of June and the spread of the pandemic, some automakers abroad are gradually resuming operations.

“It is Volkswagen, Volvo, Reno, etc., but the work is not yet working at full capacity,” described the sentiment of the market.

It is true that the suspension of automobile production due to the coronavirus is also reflected in the activities of companies operating in Lithuania, which are engaged in the production of automobile parts and components. According to the company, 40-80% of companies operating in Lithuania worked in May. capacity, and the main reason for this was the drop in demand.

“The main thing is the demand issue, because Europe has just come out of quarantine, people are not used to buying cars online and have been waiting for the time when they will be able to come to showrooms.”

Another thing is uncertainty. Businesses and individuals have avoided shopping because it is not a necessity, ”he said, saying that it would be possible to predict that companies that manufacture auto parts in Lithuania will reach approximately 60% at best in June. the first level of production, which means that the drop will reach around 40 percent.

“If we look even further into the future, almost all companies, as agreed, claim that the real recovery will feel lonely in the fall, but in any case it will not return to the previous level. In the fall, from September to October it will reach approximately 60-80 percent. He predicted that this would also be affected by the summer holidays.

I did not avoid downtime

Due to falling demand for cars, Lithuanian companies producing their parts were also forced to put their employees on downtime, the cluster manager explained. He assured that in the companies they were both complete and partial, but, according to him, today the employees are gradually returning to their normal work rhythm.

“There are companies, let’s take CIE LT Forge, it pretty much had a full downtime, and now it’s going back a bit, but it’s still not a full return to work even after two months. Some people are still in downtime, “said D. Lasionis.

Delfi also contacted Proton Engineering Lithuania, a company that makes engine parts for Scania and Volvo cars in Lithuania. Its director, Tomas Kocius, also said that all company employees were completely inactive in April.

“We announced downtime in late March, downtime in April, zero sales, and maybe some people in May, three days a week.” Turnover has dropped entirely, but it is good that our company is a Swedish subsidiary, so we have a mother who will help us survive, “he said.

Still, T. Kocius said the company expects to recover in June.

“It just came to our attention then. It’s hard to say how much, but maybe around 70-80 percent. We will do the production. Since June 1, we have called all employees for lack of downtime and they have all started to work ”, he said.

Group leader D. Lasionis also mentioned bankruptcies. He said that although they did not exist in Lithuania, because it had been a very short time since he spoke with companies from abroad, the mood in Europe could not be avoided.

“The trends are such that smaller companies are expected to fail, especially,” he said.

You can also win

According to D. Lasionis, if companies fail, such changes can also bring positive winds that large automakers will review their supplier lists.

“This is a challenge for Lithuanian companies, on the one hand, but on the other hand, the opportunity to use new supply chains to visit a new customer,” he hinted.

“If, for example, due to the coronavirus situation in Italy and Spain, where companies and the economy have been most affected, certain companies will not recover, it is natural that as demand grows, Lithuanians can come to that chain and offer their service, “he explained.

Lasionis said the group had received new inquiries from foreign companies, most of which was due to the closure of businesses in Italy or Spain.

“Naturally, in the event of an interruption in the production of components, the Germans approached us and asked us to share the existing information and contact details,” he said.

However, according to D. Lasionis, new short-term consultations, compared to recently lost turnover, will not balance the balance.

“It just came to our attention then. To get to a giant like Volkswagen, BMW and others. It takes a minimum period of about half a year. Traditionally, getting to them and starting production can take a few years. A lot of debugging.

It is not enough to give a response when receiving a request to produce a part for this or that price. Then they come, the audit begins, people come from production, the company is tested, analyzed, test batches are produced, quality is verified and only then the Lithuanian company that meets all criteria and has passed all audits. can supply.

I think our companies will win because of the situation only because we have not fallen as strongly as the countries of southern Europe, “he said.

Tomas Kocius, Director of Proton Engineering from Lithuania, also led the head of the cluster.

“Our parent company in Sweden has received inquiries and we expect some orders to come to us. We are talking about it and thinking about it, but that in principle the supply chain will change, from China to Europe, Lithuania, the probability is enough high here, ”said T. Kocius.

Feel the recovery

Dainius Volskis, the director of Hi-steel, a company that makes German auto parts, also told Delfi that he was feeling the recovery in production, but said that so far he could say it with great caution.

“We have three divisions, although they all belong to Automotive, but they are a little different. One is an assembly unit that supplies products worldwide, the other is a stamping unit linked to the German market, and another is a new equipment production unit.

The latter has a lot of inertia and the projects that have been commissioned last 3 months, so it does not stop so quickly. We work there at full capacity.

The assembly division was also operating at full capacity, but there were problems with the supply chain, and the stamping division was going downhill, ”he said, adding that the company produced more in warehouses in April, a drop of around 20 %, but very poor in May. and the drop is about 80 percent.

Still, speaking of June, the director explained that the situation is not yet bad.

“We have a fairly similar level in June than last year, we are going up, but our situation is changing every week.

What we produce today does not mean that we can sell in a week, because the responses are canceled and removed, and the products remain in stock.

After all, to this day, to put it very carefully, there is a recovery, “said D. Volskis.

It is difficult to talk about long-term demand.

Vidmantas Janulevičius, vice president of the Lithuanian Confederation of Industrialists, also assured that the recovery is felt as people return to work, but it would still be naive and useless to talk about long-term demand.

“Until now, it would be too early to enjoy the recovery, because the consumption of goods such as cars, apartments, houses has stopped and long-term sustainable demand has not yet been created, but the initial steps of the recovery are. What How sustainable it is and how long it will be really difficult to say. We are very dependent on the European market, “he said.

V. Janulevičius also said that by looking at the stocks of the major automakers, BMW, Mercedes and Volkswagen, you can see that they are growing, indicating that companies are beginning to recover.

“This sector is likely to get out of all of this bit by bit, and this gives us hope that our companies, which are involved in the entire vertical chain, should also gain momentum one day. However, we are not yet talking about going back to the previous level, we are talking about 60-70%. level in June, which was before the pandemic, “he said.