Guido MEINELT: To overcome the pandemic, we need to stick together
InfoMarket Business News Agency is implementing "InfoMarket-20: ProInvest-2020" project in partnership with the Balti Free Economic Zone. InfoMarket agency was founded 20 years ago; we made the Pro-Invest project to reflect the interests of local and foreign investors in Moldova in business media. The situation in the world and Moldova have radically changed over the years, the time has come to unite investors and business media to make each other stronger and contribute to the development of the economy. This is a way to exchange experience and knowledge, as well as ideas on doing business in Moldova and be ready to move to the next level.
We start the launch of the commentary in a new format with the most resourceful and large-scale project from the investment point of view, it’s Balti FEZ, which was founded 10 years ago. And our first guest is the general manager of the DRÄXLMAIER Group in Moldova, Mr. Guido Meinelt. DRÄXLMAIER built the first plant in Balti for the production of automotive wiring harnesses in 2007. In 2010, when FEZ Balti was created, the company DRÄXLMAIER became the first resident in it. The company launched the second plant in Balti in 2011, extended it greatly in 2017, and opened the third plant in Cahul’s subzone in 2019. Besides, the company opened a Product Development Office in Chisinau. Design engineers at DRÄXLMAIER Chisinau Office participate in international projects to develop components and interior parts for premium cars for the automotive industry.
Three DRÄXLMAIER plants in Moldova (two in Balti and one in Cahul), as well as Chisinau Product Development Office employ over 5,000 people in total. The company is one of the largest investors, exporters and taxpayers in Moldova. According to the Ministry of Economy and Infrastructure, the total amount of investments exceeded 100 million euro over 13 years. DRÄXLMAIER employs engineers, developers, managers, administrative employees, workers, logisticians, mechanics and other skilled experts.
InfoMarket: What plans did the company for 2020 and how the pandemic affected them?
Guido MEINELT: This is probably the biggest post-war challenge for the whole world, including our company. Now, our main task is to keep the company with financial freedom and independence, preserve it, acting quickly and decisively.
Since the outbreak of COVID-19 in China, we have been analyzing the impact of this crisis on our company; we quickly understood possible consequences, so we were able to act efficiently while the pandemic went beyond China and swept Europe and America. Car manufacturers reacted to this crisis by stopping plants temporarily to slow down and halt the spread of the pandemic. At the same time, many companies had to close most of their sites due to the closure of borders, thus the supply chains collapsed. We had to stop our deliveries and production processes and close our plants temporarily.
The stopping of our deliveries meant downtime, because we use the logistics concept of lean manufacturing: Just-In-Time and Just-In-Sequence. Therefore, we have tightened processes in terms of raw material costs, since materials are not necessary when production stops. The DRÄXLMAIER Group closed most of the facilities and switched to emergency operation during the pandemic.
At the moment, the companies in China have restored their production activities by 90% approximately, compared with the work flow before the corona virus. And we have no doubt that Europe will follow it. As soon as our customers resume work at their production facilities, we will do it too. We will have financial income again due to the increase in production, not just expenses, as it was during the almost complete closure of enterprises in Europe in April.
InfoMarket: How much is the reduction of orders for Moldova from international automobile companies? What are the prospects of working in the medium term now?
Guido MEINELT: Production volumes partially decreased in April and May and we expect a similar decline in the coming months.
InfoMarket: How did the pandemic affect the work processes, and how does the company intend to work after the termination of the emergency state?
Guido MEINELT: The most important thing for the DRÄXLMAIER Group is the safety of our employees. We have determined procedures to carry out our activities safely. We have developed a number of manuals, checklists and implemented them in every workshop. Since January, we have followed all recommendations regarding disinfection and hygiene and distributed this information among employees. We reconstructed production work places, canteens and lounge areas during the period of temporary downtime; we made it in accordance with the social distance requirements. We provide all the necessary protective equipment to all employees. We evaluate each workplace in the DRÄXLMAIER Group to determine what type of protection an employee needs and distribute protective equipment in accordance with these needs. In general, we have done everything in our power to create a safe and reliable work environment. In addition, each employee is responsible for their colleagues.
It is important for us, as a company that all employees comply with the protection rules not only in the plant or in transport, but also at home and other places. Employees in their daily lives should ensure that their contacts are limited and that the social distance is always maintained. Management can moderate and determine instructions, but it is also extremely important for each employee to follow the necessary protective measures actively in the fight against the spread of COVID -19. We value the commitment and discipline of all DRÄXLMAIER employees.
InfoMarket: Your company has gradually resumed operations from about the third decade of April. What influenced this?
Guido MEINELT: DRÄXLMAIER is gradually resuming operation after a temporary downtime around the world. Some European enterprises began to produce the necessary protective equipment in small volumes (masks, protective shields), which is more in demand during this period. Such production is aimed at supporting the local health system in the DRÄXLMAIER regions of operation, mainly providing donations to medical workers. However, the general plans are to resume large volumes of production after some time. The factories in Moldova operate under existing contracts.
InfoMarket: What was the overall loss caused by COVID-19 in the European and global auto industries? What could be the consequences for the Moldovan automotive sector companies?
Guido MEINELT: The pandemic and all the restrictive measures adopted in most countries have affected the automotive industry and other industries. Nevertheless, our customers from the premium automotive industry will gain momentum in the near future. Our production portfolio is future-oriented. In addition, we have what the cars of the future will need in current segments of production. This is confirmed not only by our customers, but also by our external partners.
After returning people to work at Moldovan plants, we saw a motivated and very ambitious team that was able to prove its previous production performance just a few days after launch. It is very important that our employees remain healthy and safe. Therefore, I want to thank all our employees who demonstrate dedication and discipline to ensure the safety of our company.
InfoMarket: Could the current situation push foreign companies to open new production sites in Moldova, taking into account the closure of car factories in Europe or the reduction of their staff, as well as the return of many labor migrants working abroad to their homes?
Guido MEINELT: One way or another, the car market has temporarily stopped. The normal action is calculating various scenarios during the crisis. In addition, it is not yet clear about consumers’ behavior after the crisis. Each company is still responsible for their decisions regarding the measures to solve this problem, despite the support provided by state programs in different countries. The main responsibility of each company is to ensure its financial freedom and independence to maintain the ability to act quickly and decisively.
InfoMarket: Does the crisis open up new opportunities for your sector?
Guido MEINELT: It depends on the consumers’ behavior after the pandemic. Strategically, we are well-positioned and have already made large upfront investments in the future of automotive industry and changes in drive technologies in relation to our portfolio of products, as well as our customers' benchmarks. The difficulties are temporary and we all must overcome them: both the population and the economy. Each state is affected by pandemic and we need to stick together to cope with this hard task. We are confident and can guarantee that DRÄXLMAIER will return to the efficiency that we had before, thanks to our employees.
InfoMarket: Can residents of the Balti free economic zone enjoy the benefits provided by the government during the emergency state?
Guido MEINELT: The residents can use the benefits provided by the government, just like any economic agent.
InfoMarket: How can the state support the industrial sector this year? Are there any suggestions for the short, medium and long term distances?
Guido MEINELT: The government’s decision to support business sector, taking into account the situation with the state budget, instead of direct payments to companies, it could be a reduction in social taxes paid by the employers within May - December 2020.
InfoMarket: Do you have any plans to overcome the crisis and reduce the negative impact of coronavirus pandemic?
Guido MEINELT: Management of reserves within our company is a crucial point throughout the crisis. The more we save, the longer we can survive. We are confident that we can overcome this crisis. We are currently seeing a growth trend that will begin in Europe, North Africa and America in May.
We are a big family company and we care about people in our large family. We will be optimistic and continue to overcome this crisis in solidarity and the spirit of DRÄXLMAIER.
NOTE: The DRÄXLMAIER Group supplies premium automobile manufacturers worldwide with complex wiring harness systems, central electrical and electronic components, exclusive interiors, and battery systems for electric mobility. The combination of core competencies in the interior, electrical, electronic and battery systems areas makes DRÄXLMAIER unique in the industry. The company thereby covers the entire process chain, from the initial idea, through the development and production process, and up to precisely in-sequence delivery of the products to the assembly lines of premium automobile manufacturers. The inventor of the customer-specific wiring harness, the DRÄXLMAIER Group develops pioneering wiring harness technology as well as electrical and electronic components, all directly in-house. These include multi-voltage and high-voltage wiring harness systems, battery management systems, and intelligent power distributors. DRÄXLMAIER is working on the future of emission-free mobility with its solution for low-voltage and high-voltage battery systems. As a market leader for interior systems in premium automobiles, the DRÄXLMAIER Group also supplies premium automobile manufacturers with ambient lighting, center consoles, door panels and instrument panels, as well as complete door and cockpit modules.
The DRÄXLMAIER Group is an international automotive supplier with more than 60 sites in over 20 countries. Founded in Germany in 1958, the company employs more than 75,000 employees throughout the world. For the DRÄXLMAIER Group as an owner-managed business, responsible and long-range thinking has always been the basis for economic success. It is therefore a core element of its strategy to design its business and production processes, as well as its products, in a more sustainable manner and in that way to increase the competitiveness of the company on a long-term basis.
In 2019, the DRÄXLMAIER Group generated sales of 4.9 billion euro. Customers of this member of the Top 100 Automotive Suppliers include Audi, BMW, Jaguar, Land Rover, Maserati, Mercedes-Benz, MINI, Porsche and Volkswagen, as well as Californian automotive manufacturers. //01.06.2020 – InfoMarket.