Škoda Auto is the driving force behind the domestic car industry. In the pandemic year 2020, it produced 750,000 cars, for which it purchased components from hundreds of Czech suppliers. Some companies are strictly existentially dependent on the car manufacturer. Due to restrictions, for example, the company Kasko from Slavkov in the Uherské Hradiště region will completely stop the production of plastic parts for two weeks. Most of the employees will also be left at home by the Sněžka Náchod production cooperative, which supplies Škoda with seat covers and headrests.
Problems The damage that employs about 35,000 people can have a negative impact on suppliers throughout the domestic automotive industry. It accounts for less than a tenth of GDP, directly employs 180,000 people and another 320,000 indirectly. In addition, according to the Automotive Association, it accounts for more than a third of industrial investment in science and research. It pays over seventy billion crowns a year to the state budget.
According to trade unionists, the critical shortage of components put Škoda Auto in the most difficult situation in its recent history. “I have not experienced such a crisis in Škoda Auto in 45 years,” Jaroslav Povšík, chairman of the Škoda unions, told the E15 daily.
Toyota in Cologne and a host of related domestic suppliers are also experiencing difficult times. Prime Minister Andrej Babiš (YES) therefore convened a tripartite on Monday, October 18, which will discuss the difficult situation in the automotive industry. Most likely, the government will renew the Antivirus program, through which the state would pay part of the wages of employees to the affected companies, who must stay at home for the duration of the plant closure.
“Everything is being prepared. On Monday, we will discuss all variants at the tripartite level. It’s open, “Deputy Prime Minister Karel Havlíček told E15 (for YES). According to the Confederation of Industry and Transport, this should be a temporary three-month support.
“The problem of the automotive industry is spread to people, the economy and most of all to Czech subcontractors, who do not have rich parent companies above them. Suppliers are facing enormous pressure. As a result, while the chip problem may be overcome in a few months, it may also happen that by this time these subcontractors will end up on the market and cars will not be produced anyway. It is a really serious situation, “said the head of the CMKOS trade union, Josef Středula, on the program on Sunday Questions of Václav Moravec on ČT. He assumes that the tripartite will agree on the approval of the Antivirus program, the costs are estimated at units of billions of crowns.
Škoda Auto is the hardest hit in the Czech Republic. He doesn’t have a job for many employees, so he prepares extensive staff relocation. According to unions, some people will even move to other plants. Employees fear layoffs.
The unions are counting on reduced production for next year as well, but they believe that conditions will improve in the second half of 2022, at a time when more chips could flow into the market.
Employment will thus be a hot topic in the forthcoming collective bargaining agreement between Škoda and Škoda. The carmaker pays an average of more than fifty thousand crowns a month in gross wages to employees in the Czech Republic. The priority of both unions and companies is to maintain employment.
Workers in the Czech Republic and Germany cannot be sure of their jobs. According to the German newspaper Handelsblatt, the head of the German carmaker Volkswagen Herbert Diess spoke at the September supervisory board about the possible loss of up to 30,000 jobs in German factories. Volkswagen stated that there are no specific scenarios for further development.
But it’s not just Skoda and Volkswagen that suffer. So far, the Toyota Toyota went through the worst period in August and September, when its plants did not produce. “The outlook for the future depends on the capacity of the supply chain. We are in daily contact with suppliers and we solve all possibilities of minimizing any abnormalities, “says the spokesperson of the carmaker Tomáš Paroubek. On the contrary, Hyundai in Nošovice maintains production.
If the carmaker brakes, the domestic network of suppliers will quickly feel the domino effect. Already in the summer, for example, Faurecia in Písek, which operates eight production plants in the Czech Republic, had to significantly reduce production. The Mladá Boleslav company, which mainly supplies Škoda Auto, has halved production.
The decline in turnover of the KES company from Vratimov near Ostrava, which manufactures cable and electrical systems, was also in the tens of percent. All agency employees also had to be laid off by Isolit-Bravo from Jablonné nad Orlicí, which manufactures, among other things, plastic parts and various forms.
“The situation in the automotive industry is very complicated, but I do not anticipate acute sharp redundancies. Some subcontractors can adapt and change the production program and supply to another field. The number of chips on the market will gradually increase next year and the situation will improve, ”says Raiffeisenbank chief economist Helena Horská.