Under the epidemic circumstances, Continental’s “chess game” and “pattern”

In 2020, a sudden epidemic disrupted the rhythm of the entire world, and also hit the global auto industry that is experiencing a downward trend. In particular, as the overseas epidemic continued to deteriorate, many European and American car companies and parts companies were forced to close factories and halt production on a large scale, which caused a number of operational “pain points” such as tight capital flows and blocked supply chains.

Therefore, for many companies, this time is not only a crisis, but also a test of survival and development. In this process, how auto companies and parts giants will respond and develop has attracted much industry attention.

As the world’s leading technology company, Continental has just launched a major global organizational restructuring from 2018 to 2019, and 2020 is the “transition year” according to the original plan. Facing the new tests and challenges brought by the epidemic, what is the current operating situation? How to deal with it … becomes an important focus of public opinion. Recently, Gasgoo found in the information collection that the company has adjusted its pace and opened a comprehensive strategic “chess game.” From the relevant measures, it can also be seen that a century-old company is focusing on the long-term “pattern” in times of crisis.

“After years of ups and downs and precipitation, our ability to respond to challenges has been greatly improved. At the same time, we have a clear plan for future success.” Said Dr. Elmar Degenhart, CEO of Continental Group.

Cut operating costs, important investments continue.

With the closure of factories, limited sales, and huge fixed cost expenditures, it is now the norm in the industry that the cash flow is heavily under pressure. Even large auto giants have to calculate how long their cash inventory can support And is planning a solution for it.

As far as Continental Group is concerned, relevant data shows that more than 40% of the 249 production bases in the world have temporarily stopped production for a few days to several weeks in order to protect employees and respond to falling demand. The factory is currently heavily affected by production cuts. Taking into account the adverse effects of the epidemic and the uncertainty of the duration of relevant restrictions, Continental Group revoked its fiscal year 2020 forecast on April 1. Previously, the group had expected total sales for the year to be between 42.5 billion and 44.5 billion euros, and its adjusted pre-tax profit margin was approximately 5.5% to 6.5%.

However, in terms of cash flow, Continental Group said it is still very sufficient. Relevant data show that as of February 29, 2020, Continental ’s cash and cash equivalents were approximately 2.3 billion euros, and unused committed credit lines were approximately 4.6 billion euros. “Our business is robust and we are full of confidence. Because we have a team that has been tested by the crisis and a solid balance sheet, this is why we can successfully survive this crisis.” Dr. Elmar Degenhart said.

Continental CEO Dr. Elmar Degenhart

Continental also made it clear that in times of crisis, cash flow is the top priority. “For this reason, we are cutting costs, optimizing working capital, and delaying projects and investments that are not urgently needed before the new decision is announced.” Dr. Elmar Degenhart said. At the same time, it specifically pointed out, “For important development projects, the company will continue to push forward fully. This is to prepare for subsequent production and maintain the company’s effective and confident operating capabilities.”

This also means that although Continental Group has taken measures to reduce expenditures, investment and development of important projects in the future will not slow down, and the money spent will still be spent. In recent years, in order to better adapt to the technological changes in the automotive industry, Continental has continuously increased its investment in the “new four modernizations” and formulated a clear plan. An important part of the plan is to focus on profitable growth areas, including auxiliary , Automated and networked driving, new automotive architecture and automotive networking realized with new high-performance computing units, and a substantial increase in the number of software and IT experts to promote the company ’s overall development from a strategic perspective.

“In industries related to us, uncertainty is still increasing rapidly. It is expected that the economic recovery will take longer than we expected,” Dr. Elmar Degenhart added: “Therefore, we are now studying how to effectively deal with the continued decline. And the overall economic situation in the medium term, and make an overall plan. Overall, the following two goals are crucial to our success, namely continuous improvement of productivity and maintenance of long-term competitiveness. ”

Seniors take the initiative to reduce salary and reward employees

Under tremendous operating pressure, recently, information about layoffs or salary reductions of international auto giants has been continuously revealed, and in China, many car companies have also frequently circulated various related initiatives.

Continental Group has also recently released relevant “salary reduction” information, but the strategy is different, not passive, but active. Information shows that the Continental Group Executive Board has decided to voluntarily give up 10% of their April income. Many group managements have also said that they will give up part of their remuneration to make similar contributions.

In a special period, salary reduction is a measure of “self-help” made by many companies. Although understandable, it involves the interests of employees after all, and improper handling can easily shake the foundation of the brand. Continental Group’s high-level initiative to reduce wages and set an example to convey the determination to “work together” with enterprises and employees is really rare.

“As an executive board, we hope to lead by example and call on group management that has not yet done so to respond positively and make similar financial contributions. This will prove that we are united at a critical moment and help each other to better cope with the future.” Elmar Degenhart The doctor said.

For employees, Continental has adopted another set of practices. Continental announced on March 19 that it decided to issue “special employee bonuses” to employees around the world in recognition of their employees’ contributions to the company in the past year. According to the employee work agreement, a negative net income in fiscal year 2019 will mean no special employee bonus. Last year, the company was not optimistic in terms of net income, but in the end, Continental Group still chose to give bonuses to employees during this difficult period, which is enough to reflect the company’s structure and the importance of talent.

“Recently, our company is still agreeing on how to further motivate employees and how to effectively promote major project investments in a special period. After all, the epidemic is short-lived, and the company is more focused on the long-term.” An insider of China Group in an interview with Gasgo When indicated.

It is also worth mentioning that as early as the outbreak in China at the end of January, Continental Group quickly formulated a plan to protect the safety of the company ’s employees and the stability of the entire team from all aspects, including the first time in China headquarters and various factories Set up a local emergency response team to prepare for war 24/7, and protect employees’ safety; deploy protective materials to all urgently needed bases including joint venture factories through the headquarters in China; formulate measures for reinstatement and epidemic prevention; provide psychological counseling and care hotlines for employees free of charge Wait. The final result was that none of the employees in Continental China was infected with the new coronavirus.

Overseas, Continental has reached a consensus with employee representatives and will adopt all possible measures in the coming weeks to respond to the crisis in a flexible manner.

Maintaining a stable supply chain

The emergence of the new coronary pneumonia epidemic, in addition to testing the anti-risk capabilities of single component companies, is also a critical moment to hone the upstream and downstream cooperation of the supply chain, especially the stability of the upstream supply chain, which not only concerns the operation of the enterprise itself, but also concerns downstream customers Normal operation. This requires parts and components companies to monitor the risk situation of upstream and downstream companies while focusing on their own development in order to respond in a timely manner.

For this, Gasgoo learned from Continental that as early as the outbreak in China, it arranged for the procurement team to sort out the list of potential affected suppliers as soon as possible, and communicated with the procurement teams in various regions in a timely manner. International cooperation to minimize the impact on production.

It is such careful planning and sufficient preparation that Continental Group can quickly put into production at the critical moment of epidemic prevention and control, complete the emergency order delivery of special parts for negative pressure ambulances from the host factory, and support the national epidemic prevention and control work. Contribute.

It is understood that during the outbreak of domestic outbreaks, negative-pressure ambulances, as an important tool for rapid ambulance transfer of patients, faced a large gap for a while. In this case, the major car companies shoulder the heavy responsibilities and make every effort to catch up, and at this time, the supply of spare parts is crucial. As one of the important parts suppliers, the Continental Group factory immediately reported to the local government to resume early work after receiving the emergency notice, and overcame multiple difficulties. It organized employees to work overtime and overtime to complete product delivery as quickly as possible, ensuring the production of ambulance jobs. Generally speaking, in an emergency, the most effective test of an enterprise’s ability and responsibility for efficient operation, and at this point, the Continental Group clearly did.

It is also worth mentioning that, in addition to being in the same boat with customers, Continental China continued its social responsibility during the epidemic, donating RMB 5 million to support China ’s fight against the new coronavirus epidemic. Demonstrating its determination and belief to “root China and serve China.”

It can be said that when the epidemic occurred in China, Continental Group’s courage as the industry’s leading brand and its determination to work with employees and partners have been fully verified. Although the overseas epidemic situation is serious now, I believe that with the concerted efforts of the Continental Group, we will definitely overcome the difficulties again and usher in better development!