Auto supply chain is 'fragile,' industry economist says

Jan 31, 2011 | 06:41 AM | Corinna Petry

The automotive supply chain "is a fragile system" that largely depends on global sourcing, a situation underscored by recent Ford Motor Co. and Chrysler Group LLC assembly line shutdowns, a leading industry economist said.

Ford's closure of a pickup truck assembly plant last week and Chrysler's decision to temporarily shut a minivan assembly line this week highlight "how connected the supply chain really is," Dave Andrea, senior vice president of industry analysis and economics at the Original Equipment Suppliers Association (OESA), Troy, Mich., told AMM.

"Across all vehicle manufacturers, it's about maintaining their supply chain through 2011," he said.

Sixty-one percent of OESA members said in a recent survey that they expect raw material shortages during the first quarter of 2011 (AMM, Jan. 24).

Andrea, citing a Federal Reserve Board report showing the sector operating at a 61-percent capacity utilization rate in the fourth quarter, said the issue "is getting the right capacity in place—that is where we are having trouble."....

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