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At 9 o'clock on February 26th, 2004, the “people in power†of China’s 20 automotive gear companies and the “heads of the brain†of the China Gearede Association’s Gear Professional Association appeared together at Tianjin Tianda Tiancai Hotel IV. In a meeting room in the building, their purpose here is only one: to discuss the good policy to deal with steel prices.
Survival squeezed These companies include: Tianjin Tianhai Synchronizer Co., Ltd., Hangzhou Advance Gearbox Group Co., Ltd., Dongfeng Transmission Co., Ltd., Jiangxi Jiangling Gear Co., Ltd., Fast Gear Co., Ltd., Shandong Dezhou Gear Co., Ltd., Shandong Linyi Lingong Automobile Bridge Box Co., Ltd., Chongqing Qingshan Industry Co., Ltd., Shanxi Datong Gear Group, Jiangxi Nanchang Gear Co., Ltd., Wuhan Shuangjun Auto Gear Manufacturing Co., Ltd., Harbin Gearbox Factory, Tianjin Automobile Gear Co., Ltd., Beijing Gear Factory, Zhejiang Shuanghuan Group Company, Hangzhou Iveco Company, Zhuzhou Gear Co., Ltd., Qijiang Gear Transmission Co., Ltd., Changchun Gear Factory, and Changchun Huayi Gear Factory. As the backbone of the industry, last year they had a hard time and the pressure this year was even greater. There is no sign of abating, and the automakers are asking for price cuts. This means that the few remaining profits will eventually be squeezed out, and finally they will not be able to sit still for years.
It is understood that the sharp increase in the price of gear steel began in the second half of 2003, and so far it has risen by an average of 60% in less than a year. Among them, the use of more 20CrMnTi (H) from the company rose from 3,200 yuan / ton to about 5,600 yuan / ton, and some high-standard gear steel ex-factory price in some steel mills even reached 6,900 yuan / ton. Wang Shengtang, secretary general of the Gear Professional Association, believes that the sharp rise in steel prices is both normal and abnormal. There are contradictions between supply and demand. Human factors are not ruled out, reflecting the irregularity of the initial stage of the market economy, and its damage to the industry is enormous. . The company's deputy general manager Yan Jianbo of Shaanxi Fast Gear Co., Ltd. introduced that the sharp increase in cost has caused the profitability of the company to drop drastically. Fast used 40,000 tons of material each year and last year produced more than 80,000 transmissions. This year it will be ready to go to 120,000 units, but the cost impact of the increase in steel prices alone will reach 150 million to 160 million yuan. At the same time, the company's next step in technological transformation, new product research and development, market expansion and bigger and stronger will all be hampered. The situation of other participating companies is also similar, so the profit of Zhuzhou Gear Co., Ltd. has dropped by 30 million to 40 million yuan. Hangzhou Advance Gearbox Group Co., Ltd. reduced profits by 55 million yuan. Zhejiang Shuanghuan Group's profit dropped by 12%. Tianjin Tianhai synchronizer Co., Ltd. currently expects to lose 2 million yuan. Well, the situation of a large number of SMEs is even more imaginable.
Shi Xinmin, deputy general manager of Hangzhou Advance Gearbox Group Co., Ltd., believes that the enterprises supporting the gear industry have been unable to stop the pressure of rising costs, and are most likely to fall in the new wave of price increases, along with supporting systems. Collapse, gear companies will collapse. Lv Chao, chairman and general manager of Tianjin Tianhai Synchronous Co., Ltd., said that if the materials are allowed to rise, the industry will not have any self-help measures, then the gear industry will eventually become a profit-making or even unprofitable or loss-making industry.
Joint Procurement How to let automobile gear companies tide over the difficulties ahead and maintain the development of the entire industry. Wang Shengtang, the secretary-general of the association, said that the joint competition strategy is currently the main countermeasure and proposes three measures: First, it depends on its own strength, taps its own potential, and digests some of it. Second, it ties together procurement to stabilize part of it. Third, it obtains user understanding. Adapt to part of the price increase. Businesses agree with this.
Everyone unanimously believes that implementing horizontal integration and adopting tender procurement are important means to reduce costs and stabilize steel prices. In particular, for some SMEs, the procurement of resources is not large, only 10,000 tons per year, alone with the steel bargaining, the cost is not enough. If they are united, pooling resources and concentrating on strength will greatly increase the bargaining weight and weight.
Some companies that have already participated in the conference have made small-scale trials. According to the report, good results have been achieved. One ton can be reduced by several hundred yuan. At present, the production of gear steel is concentrated in a few special steel mills, and due to strict standards for gear steel and high quality requirements, steel mills do not want or restrict production, leading to tight supply and demand tensions. Many gear companies are unable to obtain the goods with money. Even if they get the goods, they must be controlled by the price and the quality is also difficult to control. In view of the shortage of resources, many companies attending the meeting proposed that a batch of new steel mills with development potential should be developed and cultivated in a timely manner, but their strength is still relatively weak. It also benefits the full competition between steel companies. Some companies also believe that tendering procurement should not be limited to the domestic market, but should also be used for overseas markets and international licensing. According to Shi Xinmin, deputy general manager of Hangya, Russia's steel prices are also rising, but the extent is less than the domestic, the company's part of the steel was taken from Russia. Some companies have also proposed that in the bidding process, there will be a practical problem in which a steel plant can hardly provide several varieties and specifications. How to solve it still requires research. Shi Chengwei, deputy director of North Tooth also proposed that steel standards for gears need to be standardized. At present, the standard of gear steel in China is very complicated. The introduction of American standards, Japanese standards, and German standards requires urgently the introduction of a Chinese standard that meets the actual and needs of the industry or that can be compatible with the standards of various countries. This will facilitate the mass production of steel mills.
Appropriate price hikes Since automobile gears are faced with a buyer's market, and this market is in a situation where production exceeds sales and price competition, raising the price of gear products becomes a more sensitive and most problematic enterprise. However, participating companies believe that it is difficult to raise prices, but it is difficult to face them again. The first step must be taken or there is no way out. Lv Chao, chairman and general manager of Tianjin Tianhai Synchronous Co., Ltd., said that it is necessary to stand on the height of the industry to view the issue of price increases. Now the gear companies have suffered two attacks, facing the steel mills' prices and the price cuts of users are powerless. To change the current situation in which such survival is squeezed, it is necessary to appropriately and reasonably increase product prices, and companies must standardize their own actions and adopt joint and unified actions, otherwise they will damage the industrial structure and make the gear industry unprofitable. The industries, funds and talents of the map will also flow to other industries. Once the industry is damaged, all companies will inevitably become victims. Therefore, maintaining the industry is to maintain the company itself. As for how much the increase is appropriate, the association will comprehensively consider the situation in various aspects and proposes a margin of 15%.
Self-exploration Although “deepening management and tapping potential innovations†is an eternal task for the company to manage republican, the participating companies have stated that it has never been so important and urgent to tap potential. It has become the current gear industry to reduce costs, increase revenue and reduce expenditures. One of the magic weapons. Some enterprises have achieved certain results in this area. For instance, Minjiang Gear Transmission Co., Ltd. expands production and sales on the one hand and spreads out the low cost. At the same time, it also increases new product development, especially speeds up the process of product differentiation, reduces homogeneity, raises product added value and technical content, and enhances the market competitiveness of products. Fast this year has launched a "a little bit more" campaign in order to obtain practical results in management innovation. Secretary-General Wang Shengtang gave guidance on how companies can further improve management and dig potentials internally, and proposed "four alliances" and "four competitions." "Four alliances" include the combination of standards, joint development, joint procurement, and joint market development; "four competitions" should be embodied in innovative designs, innovative processes, innovation management, and innovative services. In particular, he pointed out that companies should learn to unite in competition and compete in alliances in particular in response to the rise in steel prices.