Tech Talk is a series of interviews that introduce you to some inspiring personalities within and outside of MD ELEKTRONIK, the world of technology, innovation, and more.
In this edition, we met with Wolfgang Reitsamer, Global Vice President Sales International Customers at MD, and talked about his work at MD, the impact of the current geopolitical situation on supply chains in the automotive industry and how OEMs and suppliers are adapting to these challenges.
Wolfgang, please tell us a little about yourself. What inspires you most about your job?
I have been with MD for 13 years, working in sales from the very beginning. Since 2016, I have been focusing on developing new customers on a global level. To this end, organizational structures have been created in all regions over the past few years, and the new customers we have acquired as a result have now become cornerstones. Even after almost a decade in the same field, I am still passionate about winning and retaining new customers, working with many different cultures, and continuing to contribute to MD’s ongoing internationalization.
The geopolitical situation is more turbulent than it has been for a long time. How is that affecting supply chains in the automotive industry?
The situation has been strained and complex for several years now. The conflicts in the Ukraine and the Middle East are continuing to unsettle the geopolitical situation. The war in the Ukraine has had a particular affect on the automotive industry. Not only is Europe’s competitiveness suffering as a result of rising energy costs due to the loss of Russian gas supplies. But in addition, with the problems in the Ukraine, the automotive industry has lost an advantageous production location which was well on its way to becoming a central pillar in Eastern Europe. Factories have been closed down and sold, and automotive suppliers have had to reinvest in North Africa, for example. So, supply chains have had to be completely changed.
In recent weeks, the markets have also been preoccupied with the erratic US tariff policy which is reflected, among other things, by the volatility on the stock markets. Penalty tariffs are like poison for the globally networked automotive industry, as supply chains have to cross countless borders until production of the final car. The increasing uncertainty over reliable global trade rules is now also leading to the fact that many companies are bringing orders forward or stocking up on inventory reserves in order to avoid supply shortages. For example, in March 2025, Apple transported around 1.5 million iPhones (approx. 600 tons) by air from India to the USA in order to avoid the US threats of a 26% tariff on goods imported from India. This kind of thing is effective, but only in the short term. In the medium to long term, many market participants – including from the automotive industry – are taking measures to align their value chains regionally, which, again, is associated with high investments. So, geopolitical tensions primarily increase costs along the entire value chain, which limits the financial flexibility of all parties concerned and threatens their resilience to possible major disruptions in the future.
How will the tariffs affect demand on the automotive market and influence worldwide sales? What price developments are to be expected?
In general, tariffs almost always lead to higher end prices – either directly as a result of additional charges or indirectly due to changed production and logistics chains. Global sales planning becomes more complex and economies of scale are harder to implement. This has an impact on the price structure in the automotive market – and therefore on demand. Medium-priced models in the mass production segment, for which a price increase of 15 to 25 percent significantly influences the buying decision, are particularly affected, which leads to a decline in demand. The tariff effect is generally lower for premium vehicles. Customers are more tolerant of prices in this segment. In addition, due to the high degree of customization and quality requirements combined with low production volumes, there is a general trend toward relying more on a network of smaller, more regional suppliers, which further limits the negative effects. On the one hand, in the USA and particularly in Europe, the entry-level segment can benefit as it is indirectly protected from even cheaper competition through protectionist measures. However, in the medium term, things are getting harder in this segment too. Due to less complex technologies, production capacities can be established more easily in new markets. BYD’s new plant in Hungary which is set to be opened in 2025 is a good illustration of this. So, trade policy is increasingly becoming a decisive factor in the strategic planning of automotive manufacturers.
What role do dual sourcing, friend-shoring and nearshoring play in the current procurement strategies of OEMs and suppliers?
All three strategies are intended to help reduce or diversify risks and to enable work to be carried out more efficiently. Dual sourcing – or procuring the same components from at least two different suppliers – has been a common means of risk diversification for a long while. Nearshoring, i.e. relocating production closer to the main markets, has grown increasingly important in recent years. The Covid crisis, which exploded logistics costs, was the trigger for this. On the one hand, transport routes are shortened – something that is becoming increasingly relevant in times of strict CO2 requirements – and on the other hand, risk minimization also plays a significant role. If the USA continues to stick to its tariff policy, nearshoring will be increasingly observed in the future in the North American regions to avoid tariffs. Another aspect comes into play with friend-shoring. This is where companies deliberately relocate their supply chains to countries that have similar political values, stable framework conditions and a comparable economic focus. The aim is to further reduce the risk of political conflicts or unwanted dependencies. India and other states in South-East Asia are currently benefiting from this trend in the smoldering trade conflict between the USA and China. In some cases, friend-shoring and nearshoring overlap, as these locations are frequently also geographically close to one another. The production sites of European OEMs and suppliers in neighboring countries in the East are a good example of this. They are considered to be politically stable partners with similar values and economic interdependencies – at the same time, the companies benefit from the proximity to European automotive plants, a good infrastructure and skilled workers.
Are the areas of raw material procurement and logistics also negatively impacted by current geopolitical developments?
Yes, for example, until 2022, Russia and the Ukraine were major suppliers of important raw materials such as the inert gas, neon, for semi-conductor production, iron ore, aluminum or copper. Historically established supply chains had to be swiftly redesigned. To this end, the European Union brought the European Raw Materials Alliance (ERMA) into being, with the aim of diversifying the supply of critical raw materials and strengthening domestic production. That’s how the first lithium refinery emerged in Bitterfeld-Wolfen in Saxony-Anhalt, which is expected to produce up to 20,000 tons of lithium hydroxide annually – enough for the batteries of around 500,00 electric cars. This should reduce dependency on China. The situation should be monitored where copper is concerned too. In 2023, China produces around 45% of the world’s copper which is a key component of the onboard network. Incidentally, Germany recycles 50% of the copper used – an extremely important and environmentally-friendly measure to reduce dependence on imports.
In the area of logistics, the protection of global sea routes will become a major issue in the future as the signals from Washington are clear: the USA will continue to withdraw its global activities in this area while potential conflicts continue to increase. Take, for example, Yemen’s Houthi rebels who recently launched attacks on the critical access channel to the Suez Canal. Another example is the Strait of Malacca, through which 20 to 25% of the world’s sea freight is transported. Japanese and Korean automotive manufacturers, in particular, are heavily dependent on raw material imports that use this route. Historically, the territorial waters have been a major piracy hot spot, and despite strong naval presence in the area, the danger of ambushes or even terrorist attacks on ships continues. In the future, the perilous situations will have to be precisely analyzed in order to keep the supply chains efficient yet robust.
To what extent could further technical developments and new innovations moderate such dependencies, particularly in cable assembly and onboard network production?
One key element is the introduction of zonal onboard network architecture, or the effects that this will bring with it. This is where the vehicle is divided into different zones, each of which is equipped with local control units. In addition to other advantages, cable routes are shortened, the onboard network is clearly simplified and as a result, material consumption is reduced. In addition, many components are miniaturized. Thinner cables and smaller connectors not only save space but also enable further material savings and weight reductions. Increasing automation is another lever on the production side. Automated production processes reduce the need for manual work, make production more efficient and flexible, and enable a more flexible choice of location – closer to the markets and away from geopolitically high-risk regions. This strengthens the resistance of supply chains and helps companies react more quickly to market changes. However, the wiring system in its special, complex structure will continue to be heavily dependent on manual labor in the future and therefore on favorable production locations – including longer supply chains.
What specific steps is MD ELEKTRONIK taking to ensure that it is optimally equipped to deal with all geopolitical circumstances?
In recent years, MD has opened three new plants in all the main regions for the automotive industry: North America, Eastern Europe and China. In this way, we are taking a “local for local” approach. Wherever possible, we procure raw materials and components in close proximity to our production sites and to several suppliers. This minimizes dependence on global supply chains, and reduces logistics expenses and dependency on individual suppliers. In addition, we rely throughout the world on production plants that we have developed and built ourselves. These plants are optimally tailored to the respective requirements, ensure uniformly high global quality standards and reduce dependence on external companies. And in addition to organizational and structural measures, at MD, we are also developing and producing our own products which meet the increasing requirements for size, performance and resource efficiency. And last but not least, we operate an active and forward-looking risk management system. We continuously analyze possible geopolitical disruptive factors, develop alternative scenarios and work out concrete contingency plans. That’s how we ensure that we will remain a reliable partner for our customers even in the most challenging times.
Wolfgang, many thanks for this exciting interview!
Reducing dependencies and diversifying risks – that’s how the automotive industry is addressing challenges in the automotive industry
The strained geopolitical situation, characterized by conflicts in the Ukraine and in the Middle East, as well as the erratic US tariff policy is forcing the automotive industry to undertake an intense restructuring of its global supply chains. Increasing energy costs, trade barriers and political uncertainties are leading to higher production costs and declining resilience along the entire value chain. Strategies such as dual sourcing, nearshoring and friend-shoring are becoming increasingly significant in diversifying risks, stabilizing supply chains and, at the same time, attaining CO₂ targets more readily. Simultaneously, technical developments such as zonal onboard network architectures, miniaturization and automated production processes are helping to reduce material usage and making it possible to select production sites more flexibly. MD ELEKTRONIK places emphasis on a global “local-for-local” strategy, it’s own production plants and active risk management in order to remain a reliable partner, even in challenging times.
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About Wolfgang Reitsamer
Wolfgang Reitsamer is Global Vice President of Sales International at MD. His role is to acquire new customers for MD and to continuously expand business with them. In recent years, he has created the organizational and technical conditions to ensure this, in particular, in cooperation with his colleagues in North America and Asia. He has over 20 years of sales experience, including 18 in the automotive industry.
