Draxlmeier: Salary costs, higher than expected

German group Draxlmeier, one of the main investors in the field of automotive parts in Romania, has seen higher than expected costs on the local market, which will affect its profitability.
“As we cannot increase prices at the pace of production cost increases and stay competitive, we continue to improve our internal processes at a global level and in Romania we have initiated a programme to render the costs involved in the manufacturing process more efficient,” said Ferdinand Zilcher, administrative manager of the group.
Last year alone, says Zilcher, the production facility that the Germans own in Satu Mare witnessed 2 million-euro higher costs following the increase in customs taxes for raw materials imported from Tunisia. “In all our factories in Romania, we have had to deal with a higher than planned salary increase,” said Zilcher.
According to available information, in Bucharest and in some parts of Transylvania, salaries have lately seen considerable raises, because of the scarcity of skilled workforce.
“Moreover, the global increase in the costs of raw materials last year affected Draxlmeier’s entire output in Romania, as over 95% of the raw materials used in the local plants come from outside the country,” Zilcher added.
Draxlmeier owns 5 plants in Romania, in Codlea, Satu Mare, Timisoara, Hunedoara and Pitesti, with total investments exceeding 180 million euros. Draxlmeier plants in Romania currently have some 17,200 employees, which is more than half the number of employees of the German group worldwide.
Part of Draxlmeier’s employees in Romania, some 300 people, have been relocated to the new Mexico-based plant of the group, for a three-year period.
Draxlmeier Group produces modern dashboard systems, interior components and functional integrated systems for customers such as BMW, Mercedes – Benz, Volkswagen, Audi, Porsche, Jaguar, Lexus, General Motors and Toyota. The entire output made by the German group in Romania goes outside the country for assembling.
Draxlmeier’s turnover in Romania saw an over 10% increase last year, to 116 million euros.