Automotive supplier: “The mood in medium-sized businesses is worse than I have ever experienced”

WirtschaftsWoche: Mr. Ramthun, you are a foundry owner. Does it bother you that such companies are labeled as “old economy” in many places?
Josef Ramthun: That gets under your skin, but it ignores the facts. There will always be cast components. Of course you can buy them anywhere in the world. But we can also keep some of this added value here in the country and continue to produce the best products.

As an automotive supplier, you deliver castings for vehicles; one of your most important customers is ZF. And you have recently established a foothold in electromobility.
We supply parts for platforms that make up electric vehicles like the Audi E-Tron, the ID models from Volkswagen or the Porsche Taycan are created. Many of our products are independent of the drive, axle parts for example. But yes, the share of business with e-mobility is growing every year; in the case of aluminum, half of it now comes from this. In ten years we will probably have predominantly e-mobility products.

What is there no longer available for it?
In the long term, gearbox construction will probably no longer be necessary. No new transmission is currently being developed. We’ll take the business with us while we still can.

When did you decide: electromobility is the future for us as a foundry?
Anyone who wants to conquer a new market as an automotive supplier needs a lead time of several years. We started with products for electromobility over five years ago and have invested 15 million euros since then. Customers must recognize a supplier as a partner in value creation. It helped us that we invested in 3D printing early on, so we were able to put components on the table that we could touch and put on the table more quickly and prevailed against competitors in series orders.

People here at the Kitzingen location in northern Bavaria call their foundry “the casting factory”. They bought the foundry out of bankruptcy 14 years ago through a management buyout. Why?
The work is over 100 years old and belonged to Sachs, Mannesmann, ZF; was then in American hands. We have the know-how, the people, the machines here. I firmly believed in that; and the quality of our products. Also a company like Volkswagen has to search all over the globe to find it – and then sometimes ends up back with us.

You mention the pressure that car manufacturers and large suppliers are buying many parts cheaper abroad. The automotive industry’s purchasing system is sophisticated and unparalleled. Does being a reliable local supplier help?
First we have at the location Germany the stamp on the forehead of being too expensive per se. But our foundry has a big advantage – namely that we have the entire value chain under one roof. This means: We cast, process and assemble. And we don’t drive the parts all over the world – this saves us CO2. When it comes to purchasing, the following applies: The entire module made up of supplier components, for example a front axle, must be the cheapest and best product – then we also get the order.

Business, especially in the midst of transformation, is not an easy one. Many suppliers also complain that planning is decreasing and call numbers fluctuate.
I certainly don’t pay entertainment tax for this. If you plan with a million units and only 600,000 units come off the production line, you have a problem. But that is our risk. The most important thing for us is the political premises that the framework conditions are fixed – and that we have a chance at all.

They allude to the energy costs in this country and the debate about industrial electricity prices.
The electricity price increase from 2022 to 2023 will cost our group 25 million euros. We need an internationally competitive cap, precisely: the industrial electricity price. It doesn’t matter to me whether the electricity costs five or seven cents, what’s important is planning security. If we are supposed to be climate neutral but don’t get any electricity, then it doesn’t work. This change can be strenuous and challenging, I don’t just want to have a tailwind. But we currently neither know whether we will get enough electricity to get to the factory, nor whether it will be green and how expensive it will be. As long as this is not answered, I will not find a bank that will promise to finance the 35 million euros I need – I have to raise this amount so that the location becomes climate neutral.

But do you want to invest?
Yes, but before that we need premises. If politicians decide too late and customers withdraw products, I no longer need to invest 35 million euros – then I can close the deal. Incidentally, a capped electricity price does not mean that the earnings of energy-intensive suppliers will go through the roof. This is a fairy tale. We are in a yield range where we are barely surviving.

There is the argument that a cheaper electricity price does not encourage people to save.
There are actually people in politics who believe that if electricity becomes cheaper, companies will use more of it. What nonsense is this? We need to turn steel scrap or aluminum ingots into liquid material. Logically, we need a lot of energy for this. If we consume too much, we will certainly not be competitive. It is in the nature of energy-intensive industries to use energy as carefully as possible. Energy now accounts for 20 percent of our costs. We have been doing programs to reduce energy consumption and be more efficient for many years. There’s no other way.

Have you already had relocation offers on the table? The head of the Krefeld foundry Siempelkamp recently reported this.
There are enough offers to rebuild what we do here somewhere else. I haven’t thought for a second about leaving. But of course at some point you have to decide: Do you still have a chance of producing here in Germany or not? If the price of electricity doesn’t go down, we will be de-industrialized in this country. Nobody will rip the site off its foundation and rebuild it somewhere else. But if the decision on a cheap electricity price comes too late, the products are no longer there. Investors don’t come to Germany, but spend their money elsewhere. Who should pay taxes in the future? It also annoys me when I see the subsidies Intel pursue. Because our transformation is not supported with a cent.

They are involved in associations and interact with other family entrepreneurs. What is the mood?
The mood in medium-sized businesses is worse than I have ever experienced. France, Spain, Portugal, Italy – all of these countries have found a way for their industry to make electricity cheaper. In addition, all the bureaucracy is slowing us down. We are only concerned with secondary theaters of war.

They employ around 1,400 people in two foundries in northern Bavaria and Saxony. Are you also lacking skilled workers?
Above all, we need to stop constantly repeating the message that everyone should work less. No nation in the world works less than we Germans, no one wants to get their hands dirty anymore. But I can’t just employ professors. And how is that supposed to work if there are elite four-day workers – who does shift work and weekend work? Lifetime work performance must increase and not decrease. We now have to look after each individual and keep them happy so that people come and contribute.

Would your employees also prefer to work less?
There are some who no longer want to work on weekends or at night and are threatening to quit. But I can’t switch off the cupola furnace, so I might as well shut down the systems completely. They have to be constantly monitored, we have temperatures of over 1500 degrees in the oven. This cannot be automated.

Also read: “Insanely exhausting” – how auto suppliers are fighting for price increases