Avramović: It’s not unrealistic that 10,000 people in Serbia’s automotive industry could lose their jobs
In Serbia, the automotive parts and components manufacturing sector includes more than 200 companies employing around 100,000 people. The crisis that has impacted German and other European manufacturers will reduce employment levels in Serbia. At least 10% of the workforce could lose their jobs. Exports, in particular, will be heavily affected, Nikola Avramović, Director of Financial Services at Alvarez & Marsal for Austria, Central, and Eastern Europe, told Forbes Magazine.
Given the state of the electric vehicle market, he believes that the opportunity for Kragujevac’s Stellantis plant lies in the production of hybrid models, for which demand is increasing.
“The parts manufacturers dominate our automotive sector, and the automotive industry is one of our key sectors, with Germany as its main export market. In Serbia, they employ about 100,000 people. The expectation that around 10,000 people, or roughly 10%, could lose their jobs doesn’t sound unrealistic. This is something we can expect in the coming period, perhaps within the next year or two,” Avramović noted.
Revenue decline
According to him, Serbia is feeling the effects of the crisis in the German automotive industry. Most of the manufacturers in Serbia are large companies working for the German auto industry. “So, if they are struggling, we will too.”
“In the short term, all of these companies in Serbia have been facing revenue declines over the past year, and these revenues come from exports to the European market. The coming year will also be challenging, as the crisis in the European automotive industry has yet to spill over to us fully,” Avramović explained.
He also noted a decline in foreign direct investment in the automotive sector. This indicates that there will be no expansion of facilities or new capacities in Serbia. Avramović added that this suggests potential disruptions in this sector on the domestic market in the near term.
Preparing a plan
“Serbia is no longer a destination for cheap labour, which is, on the one hand, a positive development, but it also carries certain risks. Over the next five years, we may see companies leave that have built their business models on cheap labour. The risk is that entire towns and regions depend on these companies. It’s crucial to start considering how to substitute for this loss in time,” Avramović emphasised.
So far, the crisis in the automotive industry is relatively young, the Forbes Magazine interviewee believes, and its full negative potential has not yet been realised. However, he added that it will happen, and Serbia has not yet started preparing for it.
“Exports will definitely be the most painful issue for our economy, with the automotive industry being the hardest-hit sector. For Serbia, the serial production of the Fiat Panda would be significant, although the production volume won’t be large. I’ve heard estimates that production in the first year could be around 50,000 units, later increasing to 100,000–150,000 units. However, there’s the question of whether there’s even a market for that volume, given that demand for the Panda in Europe is extremely low.
Production will definitely start, and the Kragujevac plant could easily pivot to producing hybrid models, for which demand is growing. So, it’s possible for the Kragujevac facility to reorient itself toward hybrids,” Avramović concluded.
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