Automotive suppliers ‘racing to keep up' with OEM production demands

01/28/2016

The January survey released this month by the Original Equipment Suppliers Association (OESA; Southfield, MI) revealed that while the Supplier Sentiment Index (SSI) is down two points to 53 from November, it remains above 50, the benchmark. However, the same period a year ago showed an SSI of 61. While this positive outlook is a result of "positive projections for 2016 sales and production volumes, caution exists over 2016's political and economic environment," said the executive summary of the survey.

Some of the other key findings for the OESA survey include production numbers that show utilization rates have moved higher, with median utilization up 5 percentage points to 85%, pushing suppliers to add capacity. The upper quartile increased from 86% to 90%; the lower quartile increased from 66% utilization in 2015 to 75% in 2016. For those suppliers at 90%+ "all-in" capacity, mitigating production risk means adding capacity through equipment or facilities, improving operating efficiencies, flexible working schedules and the use of alternate sourcing.
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