Škoda’s Radek Špicar: financial crisis very serious but also positive challenge for car industry
Radek Špicar is director of external affairs at one of the Czech Republic’s biggest companies, the carmaker Škoda Auto. With car sales around the world drying up due to the financial crisis, Škoda, like other firms, has been cutting production and faces uncertain times to say the least. At his Prague office, Špicar, who is 31, discussed the future of the automotive industry in the Czech Republic. But first: what does his own job entail?
“I’m basically responsible for three agendas. The biggest one, with the most responsibility involved, is new Škoda investment projects, like the construction of a new technological centre, which we just finished recently, or the expansion of our industrial zones – and I do that with respect to state aid, which we receive.
“The next agenda, which is also quite time-consuming, is negotiations with institutions like the European Commission, or the Czech government, or even regional governments in the Hradec Kralové region or the Central Bohemian region, when it comes to issues concerning the automobile industry.
“For example, I spent last year negotiating the CO2 directive with the European Commission and with the Czech government.
“And the third agenda, which I like the most but unfortunately don’t have much time to work on, is corporate social responsibility.
“I’m basically responsible for projects that we do for employees, for cities in which we have plants – ecological projects or social projects.”
Škoda is probably one of the Czech Republic’s biggest brands around the world. But today how Czech is Škoda? It’s German owned [by Volkswagen] and I believe all the new cars are designed in Germany – how Czech is it?
“And he said, for me companies which are located in the Czech Republic, which employ Czech employees, and which pay taxes in the Czech Republic, are simply Czech companies.
“I would agree with that definition, and I consider Škoda to be a Czech company.”
In recent years the car industry has been possibly the main motor of the Czech economy, which was very successful for a long time. Given the events of the last four or five months with the world economic downturn and the global financial crisis, what do you think is in store for the industry?
“You know, there are ups and downs in the automotive industry, just like in other industrial sectors. For a few years it goes up, for some time it must necessarily go down. At the moment it’s going down, but it’s a normal fact of life and we should see it like that.
“And if you look at history, periods of growth are always longer than recessions. But you must take it as a fact of life and look at it in a positive way. I know nowadays it is very difficult, because the situation is really very serious.
“But there are some positive aspects of that as well. Because it makes companies think about their productivity, about new ways to increase it. The situation forces you to cut costs that you might otherwise not do in normal times.
“It makes you think about your portfolio, whether you’re doing the right cars or not. It makes companies look at other prospective markets, different from traditional ones. Etceteras, etceteras.
“So you must take it as a challenge, which it is, no doubt about it, but as a positive challenge that you can actually use to your own favour.”
Some carmakers, including the new Hyundai plant in north Moravia and yourselves at Škoda, have cut production recently. Will we see more of that?
“Well, that’s what you do when demand drops, as it did in recent months. And it’s good that companies and carmakers are as flexible as they are, because it prevents them from producing cars that they wouldn’t be able to sell.
“So, yes, you see limitations of production in many companies. At the moment, as far as I know from other companies, it’s sufficient. And whether we will see more of that depends on how deep and long the crisis will be.
“At the moment, if you read newspapers, talk to analysts, nobody knows. It’s very difficult to tell at the moment where it’s going to lead.
“But the measures that have been adopted within the automobile industry are sufficient at the moment. We’ll see whether that will be the case in the future.”
Speaking of the future, do you think in a few years, say in five years, after the crisis is over and things get back to normal, that the motor industry will again have such a central place in the Czech economy?
“Yes, I think it will. Why? Because there are reasons carmakers come to the Czech Republic, it’s not a coincidence. It’s because we have many comparative advantages. There has been a very long tradition of the automobile industry in the Czech Republic. Just take Škoda, a carmaker that is more than 100 years old.
“We have a great potential of skilled labour force, especially in areas that you need for the car business. Our geographical location is very favourable for carmakers, because you can really serve many markets from here.
“That makes us an interesting location for new investments, not just when it comes to the automotive industry, but other industrial segments as well. And I think it will stay like that for a long time.”
Will there come a time, do you think, when Czech workers will cease to be reasonably cheap for international companies, and carmakers like Hyundai could close up shop and move somewhere else?
“It’s not that easy to move a car company abroad. Those companies are big. When you take a paint shop or a press shop, you cannot simply move it elsewhere, it’s not technically…well, it is possible, but it’s definitely not easy.
“We are not a country with cheap labour any more. It’s still cheaper than many western European countries, but a cheap labour force is not our main comparative advantage.
“Of course, we have to start working on other comparative advantages in order to keep Czech companies and foreign investors in the Czech Republic, and possibly attract new ones.
“And what do we have to do in this respect? It’s easy, we have to motivate more students to study at university, we have to expand the capacity of Czech universities.
“We have to make technical and natural sciences more popular, so that students study engineering and other subjects, not just political science or history, because our economy needs graduates in natural sciences. The future of the Czech Republic is in higher value added, in a qualified and educated workforce.”
