In order to reduce operating costs as much as possible in a depressed market, layoffs and reductions in traditional businesses may be the pains many auto parts companies have to bear in 2016. Since 2015, many parts and components companies have reported the news of salary cuts and layoffs. Some companies may be forced to do so, while others take the initiative to improve their management and management methods. The market forced the corporate line to shrink The drastic decline in the commercial vehicle market, especially the truck market, in recent years has brought unprecedented difficulties to diesel engine and other commercial vehicle parts and components companies. Since May of last year, the gap between the actual output of most diesel companies and the original target has continued to increase. Yu Ping, chairman of Yuchai, said in an interview with reporters that Yuchai’s product lines in the past were large and complete, and that resources will be concentrated in the future. Not only will the product line be adjusted, but staffing mechanisms will also change greatly. It is understood that Yuchai has started a series of internal transformations since 2014, and the corporate management system has been flatter than before. Last year, the company successfully reduced the original 13 management lines to six, and the streamlined management brought more efficient management mechanisms and faster market resilience. According to the reporter’s understanding, Yuchai’s streamlined staff has expanded to include thousands of people, including management personnel and front-line employees. Facing the decline of the heavy machine market, Weichai Group will focus on streamlining loss-making enterprises, turning off non-strategic businesses, moving to the high-end market, strengthening collaboration among businesses, and fostering strategic emerging businesses. According to the information provided by the insiders of Weichai, in addition to light diesel engines, the profit contribution rate of the diesel engine business of Weichai vehicles has continued to decline. The Group has accelerated the consolidation of various business segments and will cumulatively streamline 12% of management personnel. In the diesel engine industry, the upgrading of emission standards has prompted engine companies to accelerate the elimination of backward production capacity and industry reshuffle. People in the industry believe that with the implementation of the Five National Emissions, the engine industry is likely to shuffle again. According to Zhu Guo'an, director of the marketing center of Jiangxi Isuzu Engine Co., Ltd., the refined soldiers are a temporary strategy adopted by diesel engine companies to respond to market changes. Adopting a series of measures to reduce expenditures and accumulate more profits is to collect R&D funds for upgrading products and provide more room for the development of the country’s five aircraft types. In other subdivided parts and components markets, there are also many parts and components companies that have proposed measures to improve the quality of government. In contrast, tires and wheel companies are under greater pressure. The tire and wheel industry is the auto parts industry with the most serious overcapacity in recent years. In 2015, many tire companies started operating at less than half. The increase in manpower costs and raw material costs, and the impediments to export business caused the continuous decrease in profit accumulation of enterprises. Large-scale enterprises reduced the composition of personnel and total business volume, and raised the proportion of domestic sales. Some small and medium-sized enterprises were unable to cope with market changes and even closed down. Wang Xiaodong, deputy secretary-general of the Wheels Committee of the China Association of Automobile Manufacturers, said: "The overcapacity in the wheel industry is mainly reflected in the relatively low-end products in the retail market, and these products will gradually be eliminated in the competition." Business operations shift from extensive to intensive In the current state of rapid decline in the growth of the automotive industry, which tends to be stable, no one auto parts company dares to continue to "swiftly walk." Many enterprises have reduced their budgets, not only to reduce corporate expenditures, adjust their personnel management structure, and properly integrate and reduce their business. They are also turning the opportunity for their operations from extensive expansion to intensive and efficient development. In the interview, many heads of parts and components companies stated that compared to the past market adjustments, the company’s response was not only reflected in the reduction of personnel and the reduction in salary, but also focused on the improvement of operational efficiency and the readjustment of direction. “Complete military management is a necessary process for responding to market crisis.†Dong Shengshun, chairman of Hunan Asia Pacific Industrial Co., Ltd., believes that in order to adapt to new market changes, enterprises can't be passive when they are refined, and they should take the initiative to attack, especially for those products whose business is relatively single, to customers. For companies with strong dependency. In fact, the performance of most auto parts companies in the commercial vehicle market is declining. Apart from the factors of the market downturn, there is also a lack of awareness of corporate self-crisis. Stimulated by the rapid growth of the commercial vehicle market in the past few years, many commercial vehicle parts manufacturing companies have neglected the internal crisis in the process of enterprise development, resulting in a decline in the ability of enterprises to resist risks. “Qianbing Jianzheng has created the conditions for the integration and development of enterprise business, and it is the process of reviewing and repositioning itself by the company.†Dong Shengshun believes that swift and simple administration must be gradual and progressive, and the most important thing is to reorient the development of the enterprise. While reducing production capacity and abandoning some businesses, we must also find “substitute products†or “replacement profits†to achieve sustainable corporate development. The bad market conditions have also accelerated the flow of various people in the industry. Employees look forward to more promising positions, and companies are also selecting elites. According to industry insiders, in the diesel engine industry, Weichai technical personnel “grouped†to Yuchai, and Futian Cummins paid a salary of 120,000 yuan to Yuchai’s technicians. Changes in other corporate personnel were also common. Seven or eight years ago, with the intensification of competition in the automotive market, the flow of employees in the automotive industry began to increase, the requirements of enterprises for personnel were getting higher and higher, the screening frequency increased, and the pace of replacement of personnel accelerated. Enterprise management mechanisms are also constantly changing. “In the process of upgrading the automation level of parts and components companies, the same process of personnel reduction will be faced, and it will be conducted step by step and in batches. In the process of building new production capacity, the technical level and qualification level of newly recruited workers will be higher. "Wang Xiaodong said. According to Yangchai’s insiders, after Yangchao’s integration into Weichai Group, in order to reduce management costs and increase operating efficiency, the Yangchai sales team was fully integrated into the Weichai sales system. During the integration process, a large number of personnel were reduced. On the other hand, with Yangchai's new light diesel engine gaining market recognition and increasing production and sales volume, Yangchai’s demand for first-line technical staff is on a rising trend. "Machine Replacement" project continues to advance As early as in 2013, many leading parts and components companies began to realize the importance of manufacturing equipment in improving product quality and operational efficiency, and began to upgrade the equipment process and technological transformation. Improving the consistency and quality level of auto parts is a direction that many parts and components companies have continued to pay attention to in recent years. Equipment upgrades, automation of production lines, and introduction of high-end robots are the most direct and effective ways to solve this problem. However, this also means that, with the improvement of the production efficiency of automation equipment, companies must streamline employees and make adjustments to the management system. The Jiangsu and Zhejiang regions, where the market has a keen sense of smell, are the pioneers in the upgrading of equipment and crafts in this round of auto parts companies. As early as two years ago, Zhejiang Province took the lead in implementing the “machine substitution†project. The plan plans to implement 5000 machine substitution projects each year within five years to promote the transformation of the industrial production mode from “manufacturing†to “intellectual manufacturing†to solve the problem of increased labor costs. Last year, Wanfeng Group responded to the call for “machine substitution†in Zhejiang province and not only successfully acquired overseas P company robotics projects, but also actively created a “machine substitution†smart factory. Automation equipment can improve the production rate of Wanfeng wheels products by 3 ~5 percentage points, the original factory of more than 1,500 people, through machine substitutions can be streamlined to 300 people, per capita income increased by 3 times, per capita remuneration can also be increased. As a gathering place for 600 auto parts companies, Xiaoshan District of Zhejiang Province began last year and plans to implement more than 150 “machine substitution†application projects for auto parts industry companies through three years of efforts. According to a member entrepreneur from Xiaoshan District, Zhejiang, the government encourages the substitution of machines. Many large manufacturing companies have begun boldly trying new types of automated production equipment. The refined army is just a means to improve the overall competitiveness. The low efficiency of management and extensive management has always been a common problem for China's auto parts companies. It is also an important reason why many auto parts companies are not strong in China. The cruelty of the current market competition is expected to force many companies to optimize and improve the efficiency of operations and management in all aspects for their own survival and development. From the author's point of view, the refined management of a company should not simply remain at the level of salary reductions, layoffs, and business shrinkage, but should also go deeper into optimizing corporate management concepts, increasing operational efficiency, and lifting the embarrassing heights of corporate redevelopment. Although this is not easy. However, it is gratifying that many companies have already started to act. Whether it is the upgrading of manufacturing equipment, the fight for talent or the adjustment of business fronts, it can be regarded as an awakening of enterprises in enhancing their competitiveness. Hetrun Industry Group Limited , https://www.hetrunindustry.com
In recent years, the commercial vehicle market, especially the truck market, has experienced a sharp decline