European suppliers and OEMs sign code of business conduct to support re-start of production

The Code of Conduct contains chapters on health and safety in the workplace, timely communication, contractual requirements and coordination of the restart.

Autocar Pro News Desk By Autocar Pro News Desk calendar 16 Apr 2020 Views icon10626 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

CLEPA (the European Automotive Suppliers’ Association), which represents 3,000 companies supplying state‐of‐the‐art components and innovative techonology, and ACEA (the European Automobile Manufacturers’ Association), which represents 16 major Europe‐based card, van, truck and bus manufacturers, have jointly adopted a ‘Code of Business Conduct in view of COVID-19’ to support a rapid and smooth restart of the automotive industry.

As per the two industry associations, a successful exit from the corona crisis will require timely sharing of critical and appropriate information, making sure that all players in the value chain can plan and act as effectively as possible. The Code of Conduct therefore contains chapters on health and safety in the workplace, timely communication, contractual requirements and coordination of the restart.

“While the safety and wellbeing of our communities remains first priority, a well-coordinated and timely restart of the sector is of utmost importance to mitigate the impact of the COVID-19 crisis for society. The joint automotive industry code of conduct will make a real difference in this process,” said Sigrid de Vries, Secretary General of CLEPA.

“We are committed to emerge from the crisis even stronger, and all partners in the value chain have a shared responsibility in managing the industry re-launch in a sustainable way. The code of business conduct gives manufacturers and suppliers essential guidance on the approach needed to overcome the COVID-19 crisis,” said Eric-Mark Huitema, Director General of ACEA.

Around 13.8 million Europeans work directly and indirectly in the auto industry. As a consequence of the crisis, more than 1.1 million automobile manufacturer employees are on temporary leave, with a multitude of others affected in the supply chain as well as dealerships. The loss of revenue is estimated to run into double -digit percentages and uncertainty remains high as to how quickly the sector can recover. Industry, in close coordination with public authorities is seeking to gradually restart manufacturing in the next few weeks.

As stipulated in the code, COVID-19 represents a global health, societal and economic challenge with severe potential impact on individuals, corporations and countries. The minimisation of risks for employees and the community at large should have always highest priority. Navigating the COVID-19 crisis together in a spirit of partnership, in compliance with the applicable competition laws, yields the best possible results towards protecting individuals and minimising economic damage.

Lessons learned summarised in this code of business conduct are meant to serve as guidance on the essential approach needed to overcome the COVID‐9 crisis in a timely and well‐coordinated manner. 

General approach: 
- COVID‐19 is seen as a global health, societal and economic challenge with severe potential impact on individuals, corporations and countries. The minimisation of risks for employees and the community at large should have always highest priority.   

- Navigating  the  COVID‐19  crisis  together  in  spirit  of  a  partnership,  in  compliance  with  the  applicable  competition  and  antitrust  laws,  yields  the  best  possible  results  towards  protecting  individuals and minimising economic damage.  

- A post‐crisis mindset will be necessary for making decisions that enable a successful return to a sustainable value chain going forward. This entails a collaborative and open approach to facilitate fast and effective decisions and, if necessary, adjustments in the spirit of solidarity.

Workplace safety:  The health & safety of citizens and employees is a priority. All players in the value chain therefore  commit to:   
- Provide a safe work environment, in line with applicable safety standards. 

- Call on public authorities for harmonised measures across the EU, as much as possible.

- Discuss, together with social partners, on common criteria, standards and conditions under which employees can return safely to restart production, ensure excellent communication with employees, install measures for preventive healthcare, and  provide the necessary training.   

- Share best practices on health and safety with partners along the value chain. 

Transparency:  A successful exit from the crisis will require timely sharing of critical and appropriate information, enabling value chain partners to plan and act as effectively as possible. Upstream and downstream partners in the value chain therefore commit to:

- Provide each other with transparent and credible information on expected demand and inform each other in a timely manner on delays and subsequent deviations. 

- Share information about the shutdown, downtime and ramp‐up of capacities with the up‐stream and down‐stream partners with the target to avoid unnecessary burning of cash.

- Communicate in a clear and transparent way with their business partners about achievable capacities in production plants, under consideration of safeguarding measures.. 

- Discuss in good faith with their business partners whether the exceptional situation requires the setting of new priorities on ongoing projects considering limited capacities in R&D and plants. This may involve revising and/or postponing project milestones and planning.

Contractual requirements: 
All value  chain  players  have a  shared  responsibility  for  the  continued  prosperity of  the  sector. In  particular, maintaining liquidity is key in times of crisis. The value chain players therefore believe that: 

- This industry can emerge sustainably from this crisis only if all players respect agreed contractual terms, in particular regarding payments, the reception and timely delivery of ordered products, investments, tooling, testing, development and engineering services and inventories created by orders, and that,

- Taking into account the extraordinary circumstances affecting the entire industry, these terms (including force majeure clauses) should be applied in a pragmatic way with the target to avoid imposing unnecessary running or additional cost on value chain partners, with the objective of ensuring an overall healthy value chain.

Preparing for recovery: 
The orderly restarting of production across the entire automotive industry value chain is impossible without close coordination. All players in the value chain therefore commit to:

- A timely ramp‐up of production capacities, coordinated between all upstream and downstream partners in a continued difficult economic and sanitary environment. This concerns projects, production plants as well as logistic capacities and, as necessary, also the consideration of potential critical needs of involved parties.
- Consider effects from production shutdowns in one region on the availability of components needed for the continuation of production in other parts of the world 

Fair Competition   Despite the acknowledged need for broad cooperation in the industry, all players in the value chain are fully committed to complying with applicable competition laws. In addition to regular legal review of all coordination efforts and information sharing, the following principles shall apply:

- Commercially sensitive information, including demand, production capacities or planned downtime or ramp up of capacities, shall be limited to partners of the same value chain and generally not shared with competing value chains.

- Where temporary information exchange or cooperation between competitors is deemed necessary to avoid a shortage of supply caused by COVID‐19, such exchange or cooperation shall be structured in compliance with Article 101TFEU/53 EEA or other applicable competition laws and in accordance with the guidance of the competent competition authorities.

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