A report issued by the Geneva-based International Labour Office (ILO) concludes that the share of added value in car manufacture accounted for by suppliers – as opposed to vehicle manufacturers – is rising. The report also says that the employment breakdown between suppliers and assemblers in the automotive industry is shifting towards suppliers.

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The report “Automotive industry trends affecting component suppliers”, says that suppliers’ share of already up to two-thirds of the value added of a car is expected to reach 75 per cent among some manufacturers.


The worldwide employment breakdown between assemblers and suppliers, which is currently estimated to be on average 54:46, is likely to move towards a ratio of 33:66, the report also says.


Although developing countries accounted for only 12 per cent of world components exports in 1999, the increasing importance of suppliers will benefit emerging markets, particularly Central and Eastern Europe, China and India, allowing them to increase their share of global components production, according to the ILO.


Viewed from the perspective of the importance of the automotive industry for a country’s goods exports, the report also finds that automotive products accounted for over 20 per cent of exports in Canada, Cyprus, Japan, Mexico and the Slovak Republic, over 10 per cent for countries such as Belarus, the Czech Republic, the EU (15), Hungary, the Republic of Korea, Lithuania, Poland, and Slovenia and almost 10 per cent for South Africa, Turkey and the United States.

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At the same time, the potential for outsourcing from companies in advanced countries due to lower labour costs and the pressure to continuously reduce costs, diversify, and deliver to increasingly just-in-time schedules, will impact on working conditions in suppliers, and require even greater flexibility on the part of the workforce, according to the report.