The automotive industry is one of Sweden’s most important industries, both in terms of exports and employment, this is well known. What many, however, may not know is that components, parts, and systems from suppliers account for around 75% of the added value in the vehicles manufactured. It is therefore crucial for the continued success of the automotive industry that society and politics understand and take into account the needs and perspectives of the supplier chain.
Sweden has several strong clusters within the automotive industry with various local manufacturers, conditions, and representatives. However, it is important to remember that automotive industry suppliers are found in all 290 municipalities and play a crucial role in the development of the entire country. FKG’s latest industry analysis shows that the supplier chain employs over 93,000 people in Sweden. Technology and service companies, producers of complete components, and producers of metal components are three groups that account for 76% of the number of employees.
A significant part of FKG’s work aims to ensure that politics consider the supplier perspective, its needs, and potential, in legislation and other political decisions.
FKG’s position on prioritized issues:
- 30-day payment terms! Efficient business transactions between companies are crucial for liquidity, growth, and Swedish competitiveness. In order to meet the structural changes taking place in the market and simultaneously focus on the importance of efficient business transactions, the “Association for Efficient Business Transactions in Business” has been formed. FKG is the initiator of the association together with Almega, Innovation Companies, the Swedish Industry Association Sinf, and Entrepreneurs. The association is open to members who share its purpose with the goal of shortening payment terms in the business sector. Challenging external factors parallel to the automotive industry’s transformation that requires significant investments make the issue of fair agreements between supplier and customer more relevant than ever. FKG works through various channels to highlight the problems of long payment terms to suppliers and the ripple effects it has on the automotive industry as a whole. As a member of FKG, you can benefit from our lawyers HERE.
- Clean, cheap, and reliable energy supply! Access to fossil-free and relatively cheap energy has long been a competitive advantage for the Swedish manufacturing industry. In the transformation that the automotive industry is undergoing, the addition of new, green energy at a consistently competitive price is a prerequisite for achieving climate goals at both the state and company levels. The turbulent price situation around energy since the beginning of 2022 has had a significantly negative effect on the profitability of the supplier chain, affecting companies’ capacity to develop and adapt. In an FKG survey in the spring of 2023, nearly 70% of companies indicated that electricity prices had a significant impact on their cost base in 2022.
- R&D funds for the supplier chain (FFI)! With 75% of value addition, it is crucial that the supplier chain also has access to state research funds and the opportunity to influence how they are distributed. FKG is represented on the board and program council of FFI – Strategic Research & Innovation for the Automotive Industry as one of four industry partners (together with Scania, AB Volvo, and Volvo Cars). FFI finances research and development activities for about one billion SEK per year, with the state providing half of the funding. In the upcoming research proposition, FKG advocates for FFI to continue in the same manner, emphasizing that FKG and Sweden’s suppliers are a crucial opportunity for the program.
- Equality benefits everyone! Increased gender equality has a proven positive effect on society and businesses. Since 2015, FKG has been running the network “Women in the Supplier Industry,” aiming to create a meeting place for women in leadership positions in the automotive industry. Through regular network meetings and lobbying, FKG aims to shed light on the issue and attract more women to STEM professions. More gender-equal and diversified workplaces make the automotive industry more attractive to work in.
- Locally produced gives competitiveness! A growing trend in the automotive industry is local-for-local, manufacturing with local supply chains instead of relying on a few global suppliers. External factors such as geopolitical instability, more expensive transportation, and tightened producer responsibility and sustainability reporting make Swedish suppliers more attractive alternatives.
- Production technology creates competitiveness – the development of new and advanced production methods is accelerating, creating the potential for further strengthened competitiveness for Swedish suppliers. Digitalization and automation are two areas where the Swedish industry is well-positioned internationally. To maintain Sweden’s position, increased access to production personnel and engineers with the right skills, as well as knowledge in the financial sector about the future potential of the automotive industry, is required to enable necessary investments.
- The one who produces data should own the data – FKG, together with CLEPA, advocates for sector-specific data legislation within the EU for vehicles. Customized data legislation that gives suppliers the right to vehicle data to drive their own innovation and resources and participate in the green transition is among the proposals.
- Competence and competence transition – the technological shift in the automotive industry, new materials and advanced manufacturing methods, digitalization, and increased sustainability requirements are some factors that demand companies to provide new skills and skill transitions for existing personnel. FKG’s position is that competence-enhancing initiatives should be available at the national level to create conditions for ALL of Sweden’s suppliers to maintain their competitiveness.