In his inaugural speech at the European Group of Vehicle Logistics (ECG) General Assembly in Zurich last Friday, incoming President Costantino Baldissara challenged the pessimistic majority before him who saw no end to the crisis in sight.
Rallying the 71% of members surveyed at the conference who predicted that the current gloom would not end before the second quarter of 2010 (or beyond), he said: “We cannot afford to remain the object of defeat or [succumb] to the negative sentiment brought by the bad news making the headlines.”
Armed with a catalogue of recent positive forecasts from both sides of the Atlantic, including one from the National Association for Business Economics, which stated that more than 90% of economists predict the recession will end this year, Baldissara said now was the time to start preparing for recovery. “I know there are many in this room who believe we have not seen the worst yet,” he said, “but there are positive signs which should not be underestimated.”
But that preparation was something that carmakers needed to be aware of for slightly different reasons.
“Clients should pay more attention to our sector by not contributing to [its] destruction,” he said. “So it’s an obligation from our carmakers, when receiving attention from the government with public money, to pay at least slight attention to us.”
Baldissara emphasised that he did not see the predicament of the finished vehicle logistics sector – which is suffering from a transport overcapacity following years of growth in the European market – as the result of a lack of transparency on the part of OEMs leading up to the recession (as was the view of some delegates at the Automotive Logistics Europe conference in Montreux this past March).
“I don’t think [carmakers] lacked transparency; they didn’t know. And obviously, in the interests of their own companies, if they didn’t know they couldn’t say ‘hey guys, take all the ships and trucks and scrap them’, because if the crisis was going to change in the short term, as some were thinking, then they would be without equipment.”
Rather, he spoke of the need for “moral support” by OEMs to their providers until the market recovers.
“On average we have volume reductions of more than 30% all over Europe [in some cases up to 70%, he added]. What we need is support through long-term relationships. We are asking clients to consider how important it is for the supply chain in the finished vehicle logistics sector to have strong suppliers. Because, if it is true that the recovery could be quick, then the equipment might not be there.”
What it also needs is recognition of the integral part it plays in the wider automotive industry. The fact that finished vehicle carriers are still not considered part of the industry was something Baldissara found hard to understand. “It is a technical mistake inside the classification of the sector, but it is unbelievable,” he said. “We are now working with several authorities to make sure that [finished vehicle carriers] will be part of the automotive sector.”
Along with that, the ECG is positioning itself to take advantage of the recovery with a range of strategies, continuing the Logistics Directors’ Forum and setting up a new organisation that will measure the action that European government have so far taken to support the finished vehicle sector. A survey at the event showed that 96% of members declared that EU legislation has a real impact on their businesses. But 63% also believed that the ECG should pursue lobbying more at national government levels as well.
The new organisation will prepare a benchmark report on the most important action the ECG would like to obtain from the single market through local associations or directly with government. The results will be publicised at a press conference in Spain in the next few weeks.
Baldissara, who is Commercial and Logistics Director at Grimaldi Group, had been the interim President of the ECG since March, taking over the role from Frits Mehrtens.