Automotive OEMs tell suppliers to be prepared to play, or go home

The automotive industry in North America has rebounded significantly with new models hitting showroom floors and sales ticking upward. However, the general concern for the OEMs is whether or not their suppliers can keep up. According to an editorial in IHS SupplierBusiness, new car sales are on pace to exceed 15 million in the U.S. this year, and North American production is expected to exceed 16 million in 2013 and 17 million in 2015, as reported by IHS Automotive.

Michael Robinet, managing director for IHS Automotive Consulting, forecasts about 135 vehicle launches per year through 2016, compared to 85 a year in 2010 and 2011. “There’s a lot of pressure on a supply base that’s already strained,” Robinet said in the editorial. “If suppliers can’t handle the pace, launches could start slipping.”

The reluctance of many suppliers to expand capacity for fear of another “fiscal cliff” in the automotive business (they’ve been down that road before) has OEMs worried. OEMs want assurance that their suppliers can keep pace with the increasing number of launches. Larger Tier 1 suppliers are responding to the call, however smaller (Tier 2 and 3) suppliers are in a conundrum over how to maintain a presence in the automotive industry without getting killed....

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