Flanders, looking for new car production by focusing on the more complex cars

Many of the large automotive companies in Flanders have pan-European logistics operations in the region. This includes the Toyota Parts Center Europe, Harley-Davidson, Honda, Hyundai, Isuzu, Komatsu, Mazda and Subaru. Three of the region’s ports (Antwerp, Zeebrugge and Ghent) are major players in the new car import and export sector. Zeebrugge is a European leader in the field, handling nearly 2 million cars annually.

A few years ago, LMS International got permission to set up an engineering center for the automotive industry called DRIVE. Set up with a grant of USD 15 million, it helped strengthen the product development capacity of automotive suppliers based in Flanders. DRIVE was to act as an extension of the individual R&D resources of the vehicle and supplier industries.

“In the last few years most vehicle manufacturers have dramatically revised the way they work with their suppliers. The number of first tier suppliers has been radically reduced, and those that remain are more closely involved in the product development process. The problems are compounded for the smaller second tier suppliers. This paradigm shift in the product development process requires that the supplier industry needs to evolve to meet new challenges that may, initially, lie outside their core competencies. In order to survive they need to rapidly acquire additional development expertise and invest in new facilities, technologies and people,” said Dr Urbain Vandeurzen, LMS Chairman, President, and CEO at the time DRIVE was announced.

In July 2005, the Flanders Investment & Trade was created by the merger of the former Flanders Foreign Investment Office (FFIO) and Export Vlaanderen. Its aim is to promote sustainable international business in the interests of both Flanders-based companies and foreign enterprises through the synergies and widened networks and expertise achieved by the merger.

Automotive Industries spoke to Pascal Walrave, Director Inward Investment, Flanders Investment & Trade.

AI: WHAT KIND OF INCENTIVES DOES FLANDERS OFFER AUTOMOTIVE COMPANIES?

Flanders offers automotive companies a large scope of incentives.

The classic incentives are the investment support (e.g. € 32.6 million for Ford Genk in 2006) and the training support (€ 2.1 million in training for Van Hool).

But, since Automotive is an important part of our industrial environment, Mrs. Fientje Moerman, Flemish Minister for Economy, Entrepreneurship, Science, Innovation and Foreign Trade, set up a special Task Force for the Automotive Industry.

The aim of the Task Force was to bring all relevant actors together and implement an optimal policy to support the automotive industry.

This resulted in June 2005 in a 12-point action plan with actions on labour costs, flexibility, innovation, logistics, and energy.

One of the main improvements is the lowering of the tax for shift work, making labour costs in Flanders growing at a slower pace than in Germany.

So, as you can see, we do support investments in the automotive industry from different angles.

AI: HOW COST-COMPETITIVE IS FLANDERS AS A MANUFACTURING HUB FOR THE AUTO INDUSTRY COMPARES TO INDIA AND CHINA?

The production of cars has a big variety of costs of which personnel cost stand for 10% of the total cost of a car. So, although our wage cost is higher than in Asia, Flanders meets competition of other regions by focusing on state-of-the-art quality, productivity, flexibility, innovation, evolving perhaps towards manufacturing more complex high end products than in the past.

Since worldwide the automotive industry has an estimated overcapacity of 20%.

The North American and West-European markets witness smaller growth, so they are the first to be analysed when reorganisations are considered. This pressure on the West-European market will continue.

AI: WHAT KIND OF CHANGES HAVE YOU SEEN IN THE AUTOMOTIVE INDUSTRY IN FLANDERS OVER THE LAST FEW YEARS,

I think that we are noticing a shift in the type of products that are made in Flanders. That means probably less standardised production, thus more tailor-made.

The renaissance of Ford Genk after the 2002-2003 restructuring and the increase in production in Volvo Cars prove that we are still wining new models. But I don’t like to think in terms of winning and losing out, it’s more a shift in the type of models being produced.

AI: WHAT IS FLANDERS INVESTMENT & TRADE DOING IN ORDER TO KEEP UP WITH THESE CHANGES?

First of all, we will continue to emphasize that the Paris-London-Frankfurt-Amsterdam is still by far the region with the highest purchasing power of Europe. So, we will continue to buy cars, to need parts, accessories, service.

On the other hand, we continue to look for new car production by focusing on the more complex cars. High end cars with excellent quality finishing, new hybrid cars, innovative buses, off road engines, are part of that focus and with the continued support of the Flemish government and their 12-point action plan, I’m sure we continue to make Flanders a respected automotive producer.