GENEVA (ILO News) - Auto parts suppliers are playing an increasingly important role in the automotive industry, according to a new report ( Note 1) by the International Labour Office (ILO). Their current share of up to two-thirds of the value added of a car is expected to reach 75 per cent among some manufacturers, the report says.
The report Automotive industry trends affecting component suppliers prepared for a tripartite meeting to be held here on 10-12 January discusses employment development, social dialogue and rights at work, and industrial relations in transport equipment manufacturing.
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 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, the report says.
Viewed from the perspective of the importance of the automotive industry for a country's merchandise 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.
The potential for companies in advanced countries to lower labour costs by outsourcing coupled with the pressure to continuously reduce costs, diversify, and deliver to 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.
An interesting development in social dialogue noted in the report is that automobile manufacturers and suppliers have been in the forefront of signing International Framework Agreements (IFAs) with the International Metalworkers' Federation and local union representatives. These IFAs recognize the core labour standards of the ILO, including Conventions Nos. 87 and 98 on freedom of association and collective bargaining, Conventions Nos. 100 and 111 on equal opportunities and treatment, Conventions Nos. 29 and 105 on forced labour and Convention No. 138 on child labour. The companies involved expect their suppliers to adhere to these same standards as part of their continuing business relationship.
Note 1 - Automotive industry trends affecting component suppliers, Report for discussion at the Tripartite Meeting on Employment, Social Dialogue, Rights at Work and Industrial Relations in Transport Equipment Manufacturing, International Labour Office, Geneva, 2005. ISBN 92-2-116442-X. Price: 15 Swiss Francs.