Economists: A shutdown at Škoda Auto could damage the entire Czech economy

Planned shutdown at the Czech carmaker Škoda The car can have serious consequences not only for the carmaker itself, but also for its suppliers, and ultimately for the whole economy. Thousands of jobs could be at risk. The economists, who were approached by the daily Právo, agreed on this.

“Škoda itself represents 5% of the gross domestic product (GDP) of the entire Czech Republic and almost 10% of exports. Any shutdown of its operation has huge economic consequences. It will be difficult not only for the company, but especially for its extensive supply chain, which is in many cases highly dependent on it, “Radek Špicar, vice-president of the Czech Association of Industry and Trade of the Czech Republic, told Právo.

As stated by Deloitte analyst Václav Franče, each billion in the loss of sales in the automotive industry will cause a loss of sales of CZK 1.9 billion (EUR 74.7 million) and CZK 0.5 billion, respectively, in the entire economy.

“Last year, as a result of the pandemic, the sales of Škoda “This year, due to a shortage of chips, the drop in car production in the Czech Republic reached 28% in August. Similar drops can be expected in the coming months,” added Franče.

“It is a blow to the entire Czech economy and an extremely unfavorable signal for the Czech automotive industry. He employs about 180,000 people in the country, “said Trinity Bank economist Lukáš Kovanda. According to him, the situation in Škoda Auto is endangering tens of thousands of jobs.

It will be important how fast production At the same time, there is speculation in the world that the shortage of chips will persist until 2023. “Then it would not be possible to solve the situation in any other way, as well as by more extensive redundancies,” Kovanda added.

BHS economist Štěpán Křeček has similar concerns. “Reducing or completely stopping production at our largest car company will have huge consequences for our industry. As this is unlikely to be a short-term matter, many subcontractors who are dependent on Škoda’s sales are in danger of disappearing. This will be accompanied by job losses, “he said.

According to him, this clearly shows the vulnerability and unhealthy dependence of the Czech Republic on the import of components from abroad.” At the same time, the weakness of the Czech

According to Pavel Sobíšek from UniCredit Bank, a complete or even partial cessation of work only in the Škoda Auto car company would affect two thirds of the Czech automotive industry. “And if the work stopped, it means that the Czech Republic would lose about 6% of GDP during this period. That would be a big blow, “Sobíšek pointed out, adding that it would then have to affect households directly or indirectly.” Of course, a chain reaction would affect the rest of the economy, “Sobíšek added. )