National Press Release

MONTREUX, Switzerland, March 9 /PRNewswire/ -- A lack of communication from carmakers as well as poor visibility in the supply chain is damaging logistics providers and suppliers as they struggle through the downturn. Meanwhile, the growth in car sales and global production prior to the recession has created lengthy, complex supply chains that, in some cases, have become unsustainable.

These were some of messages to emerge from the Automotive Logistics Europe conference last week, where nearly 200 delegates from the European automotive logistics industry gathered. They included executives from OEMs such as Ford, Renault-Nissan, and Audi, as well as tier one suppliers and logistics service providers of all kinds.

Transport providers and suppliers criticised OEMs for not being more transparent as the financial crisis decimated vehicle sales. According to Vega's Franz Blum, even when commercial vehicle sales had dropped from 26,000 to just 600 in one month, providers were not informed. "The word 'partnership' is ridiculous," he said. "It's a sunshine friendship. There is no communication left with the manufacturer."

Manuel Formis, from tier-one supplier Honeywell, said that while carmakers were delaying new model launches, they did not always communicate that along the supply chain, leaving suppliers producing or shipping parts needlessly. Collaborative logistics with other tier suppliers in order to reduce cost was not the answer - "we've tried it and it doesn't work," said Formis, and added that logistics cost must become 100% variable in line with demand, not 70% variable as now.

To achieve this, manufacturers and providers will have to become more responsive, and increase communication in the supply chain, whether to react better to demand or to mitigate the risk of suppliers on the brink of collapse. Michael Druml, from contract manufacturer Magna Steyr, said that his team was doing this, though he was most worried about the implication of suppliers going into receivership. "In that case, an official receiver could come in, increase prices 80% and change the payment terms to cash on delivery," he said. "I'm not even sure our IT systems could handle such a transaction."

Cary VandenAvond, from IT supplier i2, presented research indicating that manufacturers will look to shorten and re-engineer their supply chains, which were often created by chance rather than design as companies expanded. Hauke Harnisch, who recently left Lear to start DualproLOG, said that while he didn't expect low-cost sourcing to end, in Europe there would be less focus on Asia and more on Eastern Europe.

However, there are still positive projects being undertaken by carmakers. Kevin Wall from Jaguar Land Rover described how his company had successfully outsourced logistics to DHL Exel in the past two years. And Anne Laure Mirabaud described how Renault had lowered inventory this year and improved cash flow by synchronising logistics and production, by being more disciplined in forecasts and schedules, and by improving in-plant logistics.

But her colleague from the Renault Nissan purchasing organisation, Dominique Monteux, revealed that when container shipping rates were high, she was rebuffed by carriers when attempting to seek long-term agreements on price. So market-based commodity pricing was now working in their favour.

There do remain other opportunities in the market. Speakers from Russian Transport Lines and OMG were bullish on the outlook for Russia, while IT systems, though a difficult investment, remain in demand since many manufacturers and providers have seen first-hand the high cost of a lack of visibility. Inform's Matthias Berlit noted fresh approaches from places like from India and Taiwan.

There is also opportunity for buyers of distressed assets. John Merry of Quantum Automotive said that his new company was looking to return to finished vehicle logistics. "There are a lot of distressed assets around, and there are significant opportunities if you take the long term view," he said. However, he believed structural change was needed. "I don't believe the high asset model is the right one. You can't invest in 10-year life assets on the basis of one-year's contract."

Finally, the aftermarket logistics for spare parts is still profitable. Ceva's Bruno Sidler observed that its high margins have been a "ray of light" for the industry.

Automotive Logistics Europe is one of a series of conferences organised worldwide by Automotive Logistics magazine, and its sister title Finished Vehicle Logistics. Future events in the series are in Shanghai in April, in Sao Paulo, Brazil in May, in Moscow in June, in Detroit in September and in India in December.

The organisation of Automotive Logistics Europe 2009 was possible through the support of its sponsors: at Gold level Ceva Logistics and Russian Transport Lines; at Global level Wallenius Wilhelmsen Logistics; and at Silver level Adampol, i2 Technologies, Inform, ITD Hungary, Macro Plastics, NYK Logistics, OMG Ports, Priority Freight, ProAct International, Schoeller Arca Systems, TemPark and Vehnet. Special support came from the Association of European Vehicle Logistics (ECG).

Notes to Editors:

See the range of Automotive Logistics conferences at http://www.automotivelogisticsconferences.com/alconferences/

Automotive Logistics magazine http://www.automotivelogisticsmagazine.com is the only global print publication covering the logistics sector of automotive. It circulates worldwide to senior executives at car-makers, tier one suppliers and service providers. There is a free weekly news service by email/web, with registrations through the website.

Every issue also includes Finished Vehicle Logistics magazine http://www.fvlmagazine.com, which is unique in its coverage in print of the outbound sector.

All these activities are published by Ultima Media Ltd, a provider of information and media in print, online and at events which is dedicated to the global business-to-business automotive sector.

    http://www.ultimamedia.com

    Contacts:

    Louis Yiakoumi
    Conference Director
    louis.yiakoumi@ultimamedia.com
    +44(0)208-987-0944

    Chris Ludwig
    Acting Editor
    chris.ludwig@ultimamedia.com
    +44(0)208-987-0968

SOURCE Automotive Logistics Europe 2009 conference