Tema Produktionsteknik – nya synsätt för ökad konkurrenskraft

1. Tema Produktionsteknik –nya synsätt för ökad konkurrenskraft Tema Produktionsteknik –nya synsätt för ökad konkurrenskraft Stephen Wallman senior advisor FKG 24 April 2013

2. FKG in brief April 2013

3. Automotive Suppliers in Sweden 80% of the suppliers are manufacturing companies (share suppliers per industry, per cent) Automotive suppliers are scattered all over Sweden (proportion of providers by geographic clusters, percent) Metal 1% 4% Complete Products 3% 0,5% Plastic 4% North / Middle 13 % Service Provider 9% General Workshops Electronics Production Systems Chemistry Mälardalen 22% Base materials Other West 23% Småland 28% South / East 14 % Automotive Suppliers employs 71 000 with a turnover of SEK 168 billion (2011) (n = 500)

4. FKG - A Scandinavian trade association • FKG 350 members • There are roughly 1000 companies in Sweden supplying to the Automotive Industry • 28% export 2011 (2004 20%, 2008 26%) • 55% of companies have more than half the production of (to) Automotive

5. Swedish OEMs - places with manufacturing • 27 150 Volvo group, Scania and Volvo Car • Global Market: • Light vehicle 1% • Truck + CV 26% • Export value 141 billion SEK (2011) • The Truck and Construction Equipment is dominant with apr. 70% of the turnover market in Sweden Source Vinnova 2012

6. FKG develops competence of its members • FKG carries out common branch seminars within various areas like financing, quality, contract law, negotiation techniques, and industrial financing • FKG analyze and comment on current issues so that its members gain better understanding of contracts, to be able to provide qualified judgment's etc. • FKG is a contracting part in the joint financed automotive research program with manufacturers and government authorities. The on-going program is FFI – Strategic Vehicle Research and Innovation. FKG supports suppliers to formulate projects, apply for funding and project start-ups. • FKG carries out profitability analysis each year of the entire branch and when required also examines the state of the market, material price development etc. Structure surveys are also carried out on a regular basis.

7. The Swedish Supplyer Industry 1 • The years 2009-2011 showed a good development for vehicle suppliersAverage annual growth rate of 11% Profit margin back to historical 6%. • Heavy vehicles have acted “engine of growth” for the industry.Major suppliers of metal, complete components and services have had both high growth and good margins • The development should be considered in the longer termThe past decade has large fluctuations The future looks uncertain. The majority believes in a decline the coming year • Although the industry generally have developed well, there are big differences. Many suppliers are still struggling with bad profitability and liquidity 15% of companies made ​​a loss and 20% of the companies shows declined turnover. 25% have unhealthy solvency and liquidity. 16% facing short-term solvency, despite stable finances in general. 2 3 4

8. Is volatile and the development must be considered in a longer term According to the latest “Vägvisaren" in November 2012, a majority of the suppliers judge that sales will fall in 2013 2003-2008 was a good period where vehicle suppliers grew by almost 10% per year After peaking in 2008, the industry lost more then 40% of sales in one year 200 168 145 Prognosis 125 117 Forecast total sales in a 10-year perspective (billion SEK) 2003 2005 2008 2009 2011 2013 (n = 500)

9. 2009 to 2011 was generally a good period for automotive suppliers 1. Growth Total turnover in billion SEK CAGR=20% • Annual average growth of 13%. Total sales increased from 117 to 168 billion SEK • Suppliers' growth is in line with OEM (Volvo AB and Scania 19%) and higher than Sweden (4% GDP growth) • After the crisis year of 2009, increased volumes and efficiency improvements led to a much higher profit margin • Despite the large increase in sales, the number of employees just increased 5 % which is an indication of improvement in productivity 168 147 44% 117 2009 2010 2011 2. Profitability Average profit margin in% +5,3% 4,8% 5,3% -0,04% 2009 2010 2011 3. ProductivityTotal number of employees 5,1% 67 300 67 500 70 700 2009 2010 2011 (n = 500)

10. Vehicle manufacturers - and heavy vehicles in particular - has acted as a growth engine for the industry Compounded annual growth rate (CAGR) from 2009 to 2011 grouped by "degree of industrial dependency" • Suppliers with a large proportion of sales to the automotive industry have had the highest growth rate • Manufacturers of heavy vehicles appear to have acted "growth locomotive". Increased demand from suppliers has fostered with great industry focus • Suppliers that have spread risks and have a broader customer base does not have the same proportion with access to the industry's recovery. Conversely, the drop probably will not be so high at a possible slowdown CAGR (09-11) Proportion of sales to the automotive industry (%) (n=200)

11. FKG’s initiative for the future • FKG has formulated the branch initiative Swedish Automotive Industry Propelled by Innovation. The initiative is based on the following grounds • Collaboration between parties with similar agendas • The right conditions for the industry • The automotive industry is important for the development of high technological development and is not special interest • Understanding that the automotive industry accounts for sustainable growth and development of society • More suppliers that carry out research and development • Investment in engineering competence in society • A trade policy that provides competitive neutrality • Working infrastructure for both passenger and goods transports • Forum for concerned parties to create common views, political dialog and an innovation fuelled think tank.

12. FFIFordonsstrategisk Forskning och Innovation Ca 1 miljard/år varav 450 mkr statligt Årlig finansiering 2013 FKG Kontakt Kansliet 10 mkr Styrelse initierat 110 mkr Transporteffektivitet 43 mkr Leif Ohlsson Energi & Miljö 102 mkr Stephen Wallman Fordons- och Trafik säkerhet 66 mkr Kurt Myhr Fordonsutveckling 66 mkr Kurt Myhr Hållbar Produktionsteknik 53 mkr Stephen Wallman leif.ohlsson@fkg.se Kurt.myhr@telia.com Stephen.wallman@telia.com

13. FFI Projekt Varje projekt skall bidraga till Energi &miljö och/ eller Säkerhet och Bidraga till ökad konkurrenskraft hos den svenska fordonsindustrin Varje projekt skall ha Aktiv medverkan av avtalspart (OEM eller Leverantör) Minst 25% näringslivs motfinansiering