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Auto supplier sentiment hits 20-month high in Sept.: survey

Oct 03, 2013 | 03:11 PM | Corinna Petry

Tags  Original Equipment Suppliers Association, OESA, sentiment index, optimistic outlook, business activity, North America, Europe, raw material costs capital investment planning


CHICAGO — Automotive suppliers’ optimism jumped in September, stemming from greater business activity in North America and a stabilizing European economy, Original Equipment Suppliers Association (OESA) senior vice president of industry analysis and economics Dave Andrea said.

The OESA auto supplier sentiment index rose to 66 in September from 60 two months earlier, a level last reached in January 2012.

One member’s plants are "busting at the seams" with work, it said.

"We have been awarded several programs from our end customers over the last two months. ... Our growth plans continue to be aggressive," another member said.

"We are seeing growth in the North American and European markets," a third company said.

While some survey respondents maintained their forecasts, none said they were more pessimistic than two months earlier.

A few auto suppliers mentioned cost concerns, but very few—three of 85—cited raw materials as an issue. Instead, labor costs are rising as factories increase capacity to supply new auto program launches.

Internal short-term challenges that suppliers face in reaching their 2013-14 business plans include human resources (hiring, retention and productivity), capacity constraints, launch management and capital planning. External short-term worries relate to market demand and uncertainty, supply constraints, selling price pressures and customer launch schedules, the OESA survey said.

The most frequently cited long-term issues included hiring and retaining workers, finding and developing talent, including in high-skilled areas such as engineering.

Auto suppliers also expressed concern about globalization, government regulations and geopolitical risks.

Overall, suppliers were bullish about the capital projects they want to achieve to meet 2014-15 demand requirements, with 48 percent very confident and 36 percent somewhat confident their capital expansions will be implemented.




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