Transmission manufacturer in upheaval: Transformation forces change

Status: 03/17/2023 08:22 a.m

Transmissions from ZF Friedrichshafen drive vehicles all over the world. Combustion engines have made the automotive supplier from Lake Constance great. E-mobility is forcing an entire industry to rethink.

Line 500 in Rotterdam, the Netherlands, does not require any drivers at all. There is no driver’s cab. But a large passenger compartment for up to 22 passengers. Instead of looking at the back of a bus driver’s head, the passengers in the red and white minibuses can look directly at the road. At least for eight minutes. Then the journey in the fully autonomous and electric “People Mover” that connects the Rivium business park with the Kralingse Zoom metro station is already over.

Vision of the future and pressure to transform

Eight minutes that, in the eyes of the German automotive supplier ZF Friedrichshafen, which supplies the technology for the shuttle, shows the mobility of the future. “We believe that these shuttles are a very good solution for inner-city traffic,” says ZF Group spokesman Christoph Horn. According to ZF Friedrichshafen, around 2,500 people use the shuttles every day. The operator is the French transport company Transdev.

Examples such as the “People Mover” from Rotterdam should encourage and signal to the 165,000 employees: ZF is preparing itself for the future. And that is sorely needed, because one of the largest automotive suppliers in the world has grown primarily through technology for the combustion engine. “More than 70 percent of group sales still come from individual mobility,” says group spokesman Horn. Above all, the production of gearboxes.

Expert sees pent-up demand

The transformation is drastic for many supplier companies, says Stefan Reindl from the University of Economics and Environment in Geislingen. “The supplier landscape in Germany is very strongly characterized by parts, modules and systems for combustion engines and vehicle concepts geared towards them. And such companies were justified – they were important for the value added in the automotive industry,” emphasizes the director of the Institute for Automotive Economics.

Other components will be needed in the future: “New materials, software and hardware for vehicle IT and networking, solutions for battery-electric drives, lightweight construction concepts and sensors will be new key technologies.” The automotive expert sees a need to catch up, especially in small and medium-sized companies, where there is sometimes a lack of know-how and financial strength.

“The situation is alarming”

The automotive industry is considered a key German industry. According to the Federal Statistical Office, around 786,000 people were employed by automobile manufacturers and suppliers in 2021. According to Reindl, the pressure to invest in new technology is increasing with regard to activities in China and North America. “Many suppliers are probably facing their greatest entrepreneurial challenge to date,” emphasizes a spokesman for the German Association of the Automotive Industry (VDA). The industry is challenged to develop new business models “while still building components for the internal combustion engine”.

A current survey by the VDA shows how bad the mood is in the German automotive supplier landscape. Nine out of ten suppliers believe that Germany is no longer competitive as a location. The result: investments would be shifted abroad. “The situation is alarming,” emphasizes a spokesman for the industry association: “Politicians must now make strategic, long-term decisions for our industrial location that go beyond acute crisis management: our energy and raw material supplies must be secured with partnerships and internationally competitive prices must be guaranteed.”

Turnover and full order books give hope

At ZF in Friedrichshafen, business is – still – going well despite supply chain problems, the Ukraine war and a shortage of skilled workers. This is shown by the annual balance sheet for 2022 that has just been presented: the company generated sales of 43.8 billion euros, 14 percent more than a year earlier. “In terms of sales growth, we have developed better than the global vehicle markets,” says ZF CFO Michael Frick. The money is needed primarily for research and development work in order to earn money with other ideas in the future.

A first step towards transformation seems to have been taken. ZF proudly refers to the order intake in the field of e-mobility up to the 2030s. “Our order volume alone for e-mobility systems and components is currently more than 30 billion euros. This will enable us to complete the transition from classic transmissions to electric drive solutions,” emphasizes Holger Klein, CEO of the ZF Group, when presenting the figures .

In a transformation that is accelerating, it is important to focus more and to further increase the pace of change. The director of the Institute for the Automotive Industry, Reindl, underscores this: “Both manufacturers and suppliers must keep an eye on what is now obviously high dynamics in order not to be left behind – in a global context, because Germany is still dependent on exports.”

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