Is the European Foundry Industry doomed?

Mercedes-Benz will leave no stone unturned, and Volkswagen wants to close plants. Cutting costs in every corner is the industry’s new mantra.

Volkswagen is famous for its job guarantees. Although it is now gone, the massive workforce is still there. Asian and US counterparts reduce the workforce in times of crisis. That shrinking and expanding forces you to find more efficient ways and also gives you breathing room in critical situations. VW has to produce half the cars with the same workforce. Even without an accountant, it should be clear that this isn’t a sound business strategy.

And still, the main issue remains. Who should be buying all these cars? Volkswagen alone would need more than 500.000 customers to purchase the cars already produced from their lot. Who wants to buy a new car that sat on an airfield for a year and still has the same quality deficiencies and crappy software.

I think you will agree; the only way forward is to increase the sales volume they get to get the revenue. But for that, the cars must appeal to the market. Does that suddenly happen? Not, especially when companies like BYD, NIO, and Zeekr ship thousands of vehicles to Europe monthly. BYD is already building their production plants in Hungary to take over the whole market.

Even the best tariffs prevent anyone from setting up shop within the EU. And just so you know, the preferred foundry groups and battery manufacturers have also started to set up their production in Eastern Europe.

How do you think this will impact your foundry operations?

Let’s make it quick. It will not benefit your revenue stream. When the large OEMs are not selling their cars, you will not sell your castings. But you already know that, as you already invested in new production lines for the larger EV castings, the volumes never came.

Taking more of the medicine that caused the sickness will not get you out of the crisis. Waiting for what will happen will only make you have a bad time. It will be a bad time that costs all your employees and colleagues their income. You need to take a different path out of the crisis.

What are the ways out of the automotive crisis?

You need to develop new markets for your foundry. There are so many non-automotive and new applications in automotive. To reach these new castings, you close the tab with the portal. You need to start researching your ideal customers. Then you need to get into the eyes of your perfect customers. In that business development process, you find the true pressure point and offer your solution.

However, Facilitating a new industry from an automotive foundry is another challenge. The automotive PPAP process is relatively slow. Other industries require a fraction of the time until series production. We have seen many foundry groups fail in, e.g., telecom. So, no business development will happen without changes in your internal process.

When you need help finding the pressure points of your ideal customers and getting your internal process up to speed, the Process Optimization Workshop is perfect for you. A 10% discount is available for all workshops in 2024. Schedule a Free Consultation down below, and let’s figure out your way out of the current crisis.