The European Association for Automotive Suppliers is concerned that the European Commission’s proposal to extend the safeguard measure which is restricting steel imports into the EU will hurt the competitiveness of automotive suppliers and put thousands of jobs at risk.
Continuing the safeguard measures in a time where steel mills are struggling to meet demand, and prices for steel have reached record levels will negatively impact steel processing industries such as the automotive sector. Under the safeguard mechanism, automotive suppliers are currently subjugated to quarterly import quotas for several types of steel.
These allocations are exhausted sometimes within days of the accounting period beginning, forcing suppliers to pay additional duties of up to 25% and limiting their ability to compete with other regions. The proposal to extend current restrictions by three years threatens to derail the sector’s recovery and reduce its global competitiveness.
Automotive suppliers source most of their steel, by a large margin, within the European Union, and predominantly import specialised steel for which no sufficient European capacity is available. The import allocation for specialised automotive steel is crowded out by imports of sectors with a far less demanding metallurgical requirement, including civil construction.
CLEPA’s Secretary General Sigrid de Vries, said, “Automotive suppliers typically only source steel outside of the EU in cases where there is no sufficient EU production capacity to satisfy the demand for specialised steel.
“This means that the continuation of the safeguard instrument with only minimal expansion of relevant quota does not serve the interest of the EU economy as a whole, and comes at a time where suppliers are struggling to source sufficient volumes of steel in time.”
Europe’s automotive sector is responsible for 19% of the demand of the EU’s steel industry, supporting tens of thousands of jobs in the European steel industry. Automotive suppliers directly employ 1.7 million people across the EU, on top of the 1.2 million people employed in the manufacturing and assembly of vehicle bodies and vehicles. The sector also creates significant employment further down on the supply chain in sectors such as steel, chemicals, textiles and production machinery. Longer lead times and higher steel prices are currently disrupting supply chains. The proposed extension of the safeguard mechanism will continue to mount pressure on the supply chain, putting jobs at risk beyond the automotive industry alone, added Sigrid de Vries.