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Austrian Automotive Industry Also Impacted by Weak Global Demand

  © ADVANTAGE AUSTRIA

© ADVANTAGE AUSTRIA

February 13, 2009

Suppliers report 20-30% decline in orders, Austrian government offers aid

At the Austrian “Automotive Summit”, which was held in January of 2009 at the Federal Chancellery in Vienna, the Austrian Federal Government, unions, as well as automotive manufacturers, all agreed on extending shorter working hours for an additional 18 months.
In addition, additional research funding for innovative companies was also authorized as was funding for training of current, as well as laid-off workers.

These measures will apply to all types of companies which have been adversely affected by the economic crisis, not just automotive companies

Automotive companies, however, have been some of the most severely impacted by the economic slump. Since October of 2008, Austrian automotive supplier companies have reported a 20-30% decline in orders. Austria’s domestic car component suppliers (of which there are over 700), dealers and workshops directly employ over 200,000 workers with an output of over 23 billion Euros- over 16 billion of which is exported, and represent roughly 10% of Austria’s manufacturing industry. Furthermore, it is estimated that over 360,000 Austrians are “indirectly” working in the automotive industry.

Companies engaged in automotive manufacturing in Austria, such as the GM Wien-Aspern drivetrain plant, have also initiated shorter working hours. In the case of the GM plant, 1540 of its 1850 workers will have shorter working hours from January to May, 2009. At one Magna plant in Graz, over 2600 employees have been working shorter hours as well.

Federal Chancellor Werner Faymann along with Vice-Chancellor and Finance Minister Josef Pröll, who both hosted the summit, stressed that because of its importance, it is vital that the automotive receive continued support.

Companies opting to put employees on short-time (instead of eliminating jobs) will be able to obtain additional funding from the Labor Market Service (AMS) for six months and, in some cases, for one year.

For some companies, however, shorter working hours are still not enough to offset financial shortfalls due to the declining worldwide automotive industry. Supplier Ebyl, a textile manufacturer focusing on the automotive market recently announced it will layoff 250 of its 600 workers. Motorcycle manufacturer KTM is also eliminating 300 positions. Many other Austrian automotive suppliers have also announced layoffs.

The Austrian government has also pledged 33 million Euros to support automotive research, especially for alternative drivetrains. In addition, a “vehicle recycling incentive” has also begun in Austria.

Overall, 2008 auto sales in Austria were still at an “acceptable” level, in fact they were only 1.5% below 2007. In 2008 roughly 294,000 cars were sold. However this number is the lowest since 2002. The end of 2008 really showed more dramatic drops in vehicle sales with a decline of 13% in November and 16% in December.

To help sustain, and hopefully increase auto sales, as well as to promote more fuel efficient and environmentally friendly vehicles, the government will provide a payment of 1,500 Euros to all consumers purchasing a new vehicle when they agree to “recycle” their current vehicle provided it is at least 10 years in age. According to the most recent statistics (2007), almost one quarter of the 4.25 million vehicles registered in Austria are older than 11 years. By one estimate, one 15 year old vehicle is the pollution equivalent of almost 100 new vehicles. This incentive is being “split” by several parties: 750 Euros will come from the Austrian government, 500 from the vehicle manufacturer, and 250 from the dealer.

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