5/12/2022
Automotive industry in decline for over two years: The Director of Kostal Macedonia on the situation in the sector

Starting from 2020, or for 28 months already, the situation in the automotive industry over the period has been continually deteriorating, assessed for Economy and Business the Managing Director of Kostal Macedonia and the President of the Association of foreign companies with technologically advanced production, Viktor Mizo.

- With the Russian attack on Ukraine, the automotive industry faced a new challenge. Nearly 80,000 employees, largely located in western Ukraine, worked in 38 factories of the automotive suppliers and foremost manufactured cables, electronics, and seat covers, chiefly for the German car manufacturers. Ukraine accounted for 7% of the entire production of automotive cables for the European market and [then] standstills immediately emerged, shifts were cancelled, and the production of the better part of the European factories of Volkswagen, Mercedes, Audi, Škoda, Porsche, Ford, came to a complete halt. Some of the activities that the large operating teams of the car manufacturers and their suppliers had to undertake included employee protection and safety in the Ukrainian factories, finding alternative locations, reproducing manufacturing machinery, and evacuating molds and tools. Moreover, the decisions to stop operation and retreat from production in the Russian plants of Volkswagen, Mercedes, Renault, Toyota, etc., led to additional market shocks, complementing the previous decision to ban export of European car brands to the Russian market. This situation was expected to result in transfer of production from Ukraine, foremost to the neighboring countries, NATO members, and later to the broader Balkan region. The penetration of more distant competitors such as Morocco is interesting, boasting with investment agreements with 5 automotive suppliers present in Ukraine in March amounting to $180 million, which would compensate for part of the production decline in Ukraine in the medium term. Some of the companies present in Macedonia that own factories in Ukraine: Gentherm, Aptiv, Kromberg & Schubert, ODW-Elektrik, Kostal, and Accomplast are considering transfer of some of the assembly lines here. If our state was prepared on time and proactive as to the long awaited approximation phenomenon, drastically more prominent during the Covid-19 crisis and the disruption to the supply chains globally, the results and expedience in these circumstances would have been much better and we could have achieved positive results by animating and attracting new investors.