Automotive suppliers bounce back, ready to spend cash


North American automotive suppliers have benefitted from the restructuring measures they took during the economic downturn, as demand recovers and future growth prospects for U.S. auto sales—which are on a long, slow path back to 2007 levels—provide optimism. That is according to SupplierBusiness, an IHS Global Insight Co., which noted in a recent report that North American volume should reach 12.9 million next year, a 50% increase from 2009, but still less than 2007 when output was 15.1 million.

“With vehicle production still at the low end of a recovery, suppliers have been able to hold firm on their prices,” the report stated. “This has led to a series of outstanding results for suppliers, especially in the third quarter.”

With new fuel economy requirements on the horizon, which means innovations in the internal combustion engine, engineers experienced in the automotive sector are in short supply, said SupplierBusiness. Add to that the funding of expensive R&D activities. Increasingly, suppliers need to “stay ahead of the curve in order to survive and meet the innovation demands pushed down by the OEMs,” said SupplierBusiness. “With these opportunities and the larger rewards that flow to those that succeed, the industry leaders will press on, and use this year’s good results to consolidate in 2011 while many essential Tier Two [think molders and moldmakers], and lower, suppliers will struggle.”...
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