Romania’s automotive industry, which posted EUR20 billion revenue from manufacturing cars and automotive components last year, could attract a new carmaker, but the government needs to introduce the dual education system fast to be able to train the necessary workforce, as well as to build highways that can guarantee strict delivery terms.
“Dual and technical education is one of the priorities of the government. Infrastructure is not the number one obstacle for development, workforce is. We won’t be able to develop the auto industry unless we do something to attract and train the workforce, make sure people who want stay in Romania actually stay there and bring back those who want to come back,” said Costin Borc deputy prime minister and economy minister in the Dacian Ciolos Cabinet at the “Auto industry – The Engine of Romania’s Economy” conference organized by ZF in partnership with New Kopel Group and Hertz Lease.
“For a third carmaker we need dual education first and then infrastructure. Everyone asks if tomorrow they can find 2,000 people willing to work.”
On the other hand, Romania lost a EUR500 million engine plant investment from Daimler to Poland, because one of the requirements of the group was for it to be able to take its products from the engine plant to the car plant in Bremen in no more than 17 hours.
“We were not a real competitor for the engine plant because of the logistics chains required by the manufacturer, and the main requirement was for the engines to get from Romania to the Bremen plant in no more than 17 hours,” Borc said.
The shortest road between Sebes (where Daimler already has a plant) is 1,634 kilometers and it takes a car more than 16 hours to travel it at an average speed of 107 kilometers per hour. A truck may travel at 89 kilometers per hour at most, which means it would take 18 hours and 20 minutes to go from Sebes to Bremen without taking into account the mandatory breaks and the time spent going through customs because Romania is not part of the Schengen area, as well as the potential accidents that may happen on a two-lane national road.
Constantin Stroe, chairman of the Romanian association of automotive manufacturers ACAROM, believes Romania has a significant advantage when it comes to attracting investment, such as being able to adjust fast and discipline, which is why Renault is now sending Romanian employees to Morocco to train the staff at its Tangiers plant.
The most important guests at the ZF event this year include Constantin Stroe, Istvan Jakab, chairman of the Environment Fund Administration, Bogdan Cocian, general manager of Elba Timisoara, Tal Lahav, chief financial officer of New Kopel Group, George Asimakis, country manager Hertz Romania and Mihai Ivanescu, head of Auto Importers with Tiriac Holdings.
The development of the local automotive industry also needs a strong local auto market, those attending the conference believe.
Automobile Dacia and Ford’s Romanian plants in Mioveni and Craiova made the cars sold in this country in only three days. Despite a rise in car sales in 2015, the fewer than 100,000 unit sales show that the market is still far from the 315,000-unit level in 2007.
“There are solutions to boost the auto market, such as converting the clunkers program into a multi-annual program and subjecting used car imports to taxation. Infrastructure remains a big problem, since there is no clear situation of the Pitesti-Sibiu highway, there is no project manager, the status of the Pitesti-Craiova highway is unclear and fixing the construction errors on the A1, A2 and A3 highways is taking too long,” Constantin Stroe said.
The Romanian authorities have kept none of their promises about infrastructure in the eight years since Ford came to Craiova and before attracting a third carmaker, Romania needs to secure the already existing investments in Mioveni and Craiova.
This year’s clunkers program starts more than one month late, but comes with two components, one for buying regular cars and the other for buying electric and hybrid cars. It is due to begin on June 6, said Istvan Jakab, chairman of the Environment Fund Administration.
Tal Lahav, the chief financial officer of New Kopel Group, says that a poll conducted among customers showed companies are increasing the number of employees, consumer spending is rising and more and more people want to buy their first car.
“Managers expect business and revenue per customer to go up in 2016. Only 4% of CEOs expect the number of employees to go down.”
People are more optimistic, and more inclined to use a financing option, Lahav said. New Kopel Group makes more than EUR25 million revenue a year from operating leasing, rent-a-car services and sales of new and used cars.
Car rental and lease company Hertz Romania’s plans include EUR10 million investments in buying new cars and opening a new office in Iasi.
“Growth will come from operating leasing this year. (…) we will exceed the 25% full-year estimates. The car rental potential is really high. Romania may not have the Greek seaside but the rural area is really worth visiting,” George Asimakis, country manager Hertz Romania said.
The local auto market could increase to 170,000 cars by 2020, compared with almost 100,000 units last year, believes Mihai Ivanescu, the Tiriac Holdings manager in charge of auto importers. Romania would need at least 30% growth in sales a year to match the 315,000-car level of 2007, though, he added.
(English version by Loredana Fratila-Cristescu)