Auto supplier barometer rebounds

05/23/2014

The most recent Automotive Supplier Barometer from the Original Equipment Suppliers Association (OESA) showed a slight rebound driven by the "somewhat more optimistic" responses that pushed May's Supplier Sentiment Index (SSI) to 59, up three points from the March level of 56. Of the 107 responding companies, only 9% indicated a pessimistic sentiment. However, it should be noted that the improving outlook is dominated by companies with annual revenues of $500 million or less.

Pessimism, said the OESA, is driven by continuing uncertainty in European, and now uncertainty over Russia. "Suppliers also cite concern for the South American region and more recently, product liability and recall issues," according to the summary.

Capacity utilization rated inched higher year-over-year. Based on quartile results, running rates range from 80 to 95% with a median running rate value at 90%. These numbers reflect the increasing production volume rates, launch activity, talent availability and supplier concerns over any unforeseen constraints. Suppliers are managing delivery requirements through shift flexibility, the summary stated.

Engineering talent (lack thereof) was rated as the most significant risk to suppliers in new product launches, not just within their own operations, but at their customers as well. Also identified as risks are production capacity - which can be seen from the utilization rates above are nearing or are at full capacity - and technology development.

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