The German automotive industry is in crisis, putting its suppliers under immense pressure to act and change. In this tense situation, the importance of targeted communication in overcoming a crisis and driving forward entrepreneurial progress is often overlooked.

Supplier industry in transition: Communication is key in crisis mode

The transformation of the automotive and supplier industry has long been in full swing. But instead of a clear sense of a new beginning, uncertainty and pressure to adapt dominate. This is despite the recently elected German government announcing a number of important measures designed to invigorate the automotive and supplier industries.

Yesterday still in demand as partners in the established value creation model of OEMs, many suppliers are now faced with a twofold problem:

• In the long term, they need to realign their business model and portfolio – with a view to new technologies, alternative sales markets and, in some cases, completely new business areas.

• At the same time, the economic situation is forcing companies to react quickly: High costs, falling demand and a weakening e-mobility sector are putting massive pressure on companies.

Companies face a dilemma: During times of crisis, they often cannot avoid taking restructuring measures. However, when the new strategy takes effect and business picks up again, it is young talent and skilled workers who are fit for the new tasks that are the key to success. However, these individuals are currently more likely to find opportunities in other sectors, such as the security and defence industry, which are experiencing growth.

A communicative balancing act: Transparency despite uncertainty

Many suppliers have to perform a balancing act. On the one hand, they must deal with acute crises, and on the other, they must ensure long-term viability. Restructuring and personnel adjustments are often unavoidable, but not without consequences.

• Uncertainty and change fatigue are growing in the workforce, especially if strategy changes that have already been initiated do not develop the hoped-for momentum.

• A mere retreat strategy harbours risks: it can lead to companies losing trust – among employees, co-determination bodies and also in the political debate.

Although communication cannot change economic conditions, it can provide orientation, which is crucial in such a phase. Those who make it clear which decisions are being made, why they are being made, and how the company is dealing with the challenges will remain capable of action and able to continue the dialogue.

Emphasise future viability

Therefore, it is not just about crisis communication; it is also about looking ahead. Even in difficult times, the groundwork for life after the crisis must be laid. This includes:

• A culture of innovation that not only promotes technological developments, but also enables new ways of working together.

• A clear understanding of what new value creation potential there is – and what skills are required for it.

• A stronger team spirit to get through challenging times together.

The future of the supply industry hinges on more than just technological innovation. The way in which companies communicate change, both internally and externally, is equally important. Effective communication can help maintain trust, provide direction, and credibly support the claim to shaping the future.

Olaf Arndt, Senior Partner & CEO

H/Advisors Deekeling Arndt

[email protected]