Clelia Crisci, president and CEO of Lapo Compound at AGI: the situation is dramatic, perhaps we would have done better to stop immediately
The coronavirus epidemic is also sweeping the auto and components sector. Today all the main Italian factories of FCA will be involved in extraordinary sanitization interventions which will also, in some cases, lead to the temporary closure of individual plants to put in place all possible measures to minimize the risk of contagion among workers. Yesterday the governor of Bavaria, Markus Soeder, said that “the auto industry is almost stalled. We need a cyclical package to deal with the impact of the coronavirus”.
This sector too is, therefore, preparing for hard times. After the ‘war’ of tariffs between China and the United States that hit the European automotive sector hard, a new spectrum now appears. “After paying for the Chinese problem that has slowed down and in some cases stopped the automotive market due to lack of components, today we are dealing with limited transport and general fear. From the inside, we stop for the risk of contagion and the tail will be long! Once the supply crisis is over, with China recovering, we will have to deal with the demand crisis, with Germany that is now completely in. There will be no investment and we will have a new financial crisis that will slow down demand even more “, explains to Agi, Clelia Crisci, president and CEO of Lapo Compound, a company active in the production of polypropylene compounds to be used in the automotive, household appliance, aesthetic and technical sectors in general.
The company, born in 2001 in Campania and grown a lot in these years, represents the first link in that chain which is the basis of the automotive sector and beyond. “We make the raw material for those who make auto components . We have the pulse of the situation, because if you don’t buy raw materials, you don’t make cars. Because without question, the manufacturers stop and we play, we too who are at the beginning of the chain” , highlights Crisci. The real problem is that “right now the last thing people think about is changing the car .”
“The situation is dramatic, ” observes the president of Lapo Compound, “perhaps we would have done well to stop immediately, at the beginning of the infection . We will certainly resort to layoffs which is the only way to deal with critical issues. In the long run you will see even more difficulties. Nobody will go around dealerships to buy cars in 4-5 months from now. ”
In addition to the problem of demand is added that of transport. In particular for “abroad we have greater difficulties in exporting , because foreign carriers are afraid to come to Italy fearing that they will no longer be able to return. This also adds to the difficulties of the orders themselves”, adds Crisci.
Difficult to quantify the drop in orders. “It is still early to say, of course if we were able to resume activity in early April, on the 4th or 5th, we will have to discount a 20-30% drop . However, I believe this is an optimistic estimate.”
The regret is that the year had started well. “We worked hard, in the early months of 2020 the market was recovering. January but also February were positive months. The market was also starting up again in Germany while now the situation is very difficult. There will certainly be a crisis in the sector”, he concludes .
Yesterday, the New York Times wrote in an article on the European auto sector, it is precisely that indicated by Crisci: the real problem is not if the car manufacturers will be able to build cars but if they will be able to sell them.