ŠKODA AUTO CEO Bernhard Maier on the current challenges and consequences of the coronavirus pandemic and looking ahead.
Mr. Maier, we’re holding a virtual interview. How is the home office working out?
Surprisingly well. We’re holding our Board meetings virtually, almost all other meetings are online too, and we also have email and telephone. Still, I’m very much looking forward to seeing people face to face, which is irreplaceable. Many people are already missing it and will certainly appreciate it even more when we’re back.
How did you react to the coronavirus crisis in the initial few days at ŠKODA?
In an exceptional situation like this, we needed to act quickly and consistently. We immediately set up a task force and a crisis management team to bring together all the relevant information and efficiently establish processes and structures. The health of our employees and society as a whole was and remains our top priority. Accordingly, on 18th March, we shut down our production at the three Czech factories and adjusted our supply chains. Our focus is now on making disciplined use of the time during the shutdown and organising an orderly, gradual restart. Some functions must also be kept running, such as our power plant or spare parts supply. At the same time, we’re continuing to work on many projects, such as development. We are fortunate in that many tasks can also be done at home.
Originally, production was planned to restart on 6th April. Now, you’ve extended the production stop until 20th April. Why is that?
Because the measures to contain the pandemic have been extended across borders and our retail operations in the Czech Republic and many other EU countries are still closed. The functionality of our supply chains and the supply of parts is still not guaranteed. Even if we were to start up our production now, we would be missing important parts, for example from suppliers in southern Europe. Given the close links between manufacturers and suppliers, restarting production should be planned on a pan-European basis.
Let’s assume that production is restarted on 20th April: how do you intend to protect your employees’ health? The coronavirus is unlikely to be defeated by then.
We’re currently working on a ‘Safe Production’ and ‘Safe Office’ concept to provide the best possible protection for all our employees and especially those working in close proximity to one another, for example, in production. The concept includes extensive protective measures, such as face masks and disinfectants. These are already in place for all those who are carrying out urgent and necessary work during the shutdown.
Solidarity, trust and prudence
How hard has the coronavirus crisis hit ŠKODA?
Our global sales markets have been severely affected. This means that we’re currently generating very little revenue, while our fixed costs remain the same. This is an enormous burden. That’s why I very much welcome the fact that the Czech government is providing fast and unbureaucratic support to the economy in this difficult situation, for example, in the form of an aid package comparable to the German short-time working allowance. However, such a measure cannot be unlimited. In the coming days and weeks, it will be crucial for society as a whole to strike the right balance between providing the best possible protection for citizens from the virus and securing the economy and jobs.
Can you estimate the financial consequences of the coronavirus pandemic yet?
No, it’s much too early for that. On the positive side, we have been operating profitably and currently have sufficient liquidity. ŠKODA has posted record results in recent years, and yes, every car not rolling off the production line at the moment is hurting us. For years, we’ve been producing at our capacity limit. That’s why, unfortunately, we probably won’t be able to entirely make up for the loss of production this year. All the more reason for us to hope that the coronavirus pandemic can be contained as quickly as possible so that we can supply the many customers waiting for our cars. With our state-of-the-art and comprehensive model portfolio, we’re in a very good position as soon as the shops reopen, public life will get back to normal, and the economy will recover. Despite this challenging situation now, I’m confident that our company will emerge stronger from it, not least because we’re moving even closer together as a big ŠKODA family in these times. Now we’re showing what distinguishes us: solidarity, trust and prudence. I’d like to take this opportunity to express my sincere thanks to all the Škodians who are handling this situation so well. Special thanks, too, to our social partner KOVO.
Does that mean you are confident of getting through this crisis without job cuts?
With our Strategy 2025, we defined a clear growth plan for 2015 that is proving effective. We intend to continue this plan when we get out of this difficult situation. The time after the coronavirus will come. Our top priority is to keep all Škodians on board for this.
What effects do you expect the coronavirus pandemic to have on the global economy?
The global economy with its globally networked trade flows has been severely affected. Nobody can accurately estimate the effects yet; they will be greater than in the crises of recent decades. The longer public life and the economy are suspended, the greater the risk that the general prosperity we’ve built up in recent years will erode. That’s why the only way we will overcome this challenge together is with a coordinated international effort. The solidarity we need to compensate for the damage caused will have to be even greater than it is now.
What do you mean by that exactly?
Now it is even more important to have pan-European cohesion so that we can get back on track after the crisis. I think it’s right, for example, to discuss Eurobonds or alternative measures that will strengthen our European Union in the long term. At ŠKODA, we’re part of a globally active Group that has its roots in Germany and Europe. I am convinced that a strong, united Europe will be indispensable for our economy, for example the free movement of goods and also our democratic society.
We can adapt very quickly to new forms of work
The current situation is very complex, if not incalculable. How can you plan anything?
We’re working on various scenarios so that we are prepared for all eventualities. Derived from earlier developments in health crises, one possible scenario is described by the experts as a “V-scenario”. This would be a development that is still manageable. According to this scenario, we would be confronted with a major slump in the short term but will emerge from it quickly and even stronger. We are currently seeing the first signs of such a scenario in China. I’m convinced that we can also manage this in Europe – with the right protective measures for people, but above all, with the right attitude. In addition, the respective governments will have to provide considerable stimuli in the form of support programmes and loans for the time after. I am glad that many EU countries are already discussing such measures. This is the only way to make the “V-scenario” even conceivable. There’s a lot at stake. Nations acting in their own self-interest is not the way to achieve the necessary balance between humanity, morality and the economy as the foundation of life.
Companies are providing support for society in various ways, too. What is ŠKODA doing?
We’re helping in several ways. For example, our Technical Development Department is producing 3D-printed reusable FFP3 respirators in collaboration with the Research and Innovation Centre on Advanced Industrial Production (RICAIP) and the Czech Institute of Informatics, Robotics and Cybernetics (CIIRC), which are urgently needed in Czech hospitals. Apart from that, we have provided through the HoppyGo platform more than 200 ŠKODA cars and 150 BeRide scooters for healthcare support and for those who need to be mobile. In India, too, where we’re responsible for the Group, our colleagues at the Pune plant are producing face shields that are being donated to doctors.
How is the coronavirus crisis affecting your e-mobility strategy?
At the moment, we’re sticking to our plans: By the end of 2022, we will have ten partially or fully electric models in our range. By the end of this year, we will have introduced the ENYAQ iV, our first all-electric car, which was designed as such from the outset.
What have you personally learned from the crisis?
I can think of a few things: for example, we should never take anything for granted, especially the simple and most basic things in our daily lives. This time gives us a new sense of appreciation for them. When it comes to communication and digitalisation, I’ve noticed that we’re already much further along than we might have thought before the coronavirus crisis. We can adapt very quickly to new forms of work. We’ll continue to take full advantage of this efficiency in digital communication when this is over. And finally, after the crisis, we may find paradoxically that the virus – although now physically creating more distance between us – brings us all closer together. And that’s why, despite all the current uncertainty, I can say one thing is certain: every crisis – even this one – presents an opportunity for us all.
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