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Automotive suppliers’ outlook revving up

Keywords: Tags  Original Equipment Suppliers Association, supplier sentiment index, Dave Andrea, Corinna Petry

CHICAGO — The near-term outlook for business trends by automotive suppliers remains very positive, and previous hiccups in the ability to produce and deliver what’s needed have cleared up, according to the Original Equipment Suppliers Association (OESA).

The group’s March survey put the supplier sentiment index at 64, down two points from January.

"Though North American vehicle sales and production schedules are improving, gas prices, the Iran nuclear issue, European debt concerns and the upcoming U.S. presidential election are keeping the sentiment outlook relatively level," the OESA summarized in a report based on survey responses.

"Suppliers remain confident in their internal and sub-tier supply chain strategies and effectiveness to mitigate supply chain shortages in 2012," according to Dave Andrea, senior vice president of industry analysis and economics. Compared with 2011, most OESA members improved their understanding of production demand, capabilities, capacity and financials. The exception was in their ability to respond to long lead-time items. "However, even here, the degradation was only slight."

Some 92 percent of survey respondents feel confident that their companies will be able to meet all customer releases over the next three months. Material cost premiums remain the primary concern, with 58 percent of suppliers expecting increased costs.

OESA members who expressed optimism in the March survey cited various reasons, especially stronger automotive sales in 2012. One wrote that it was becoming quite clear that production of 14.1 million vehicles this year is highly possible. "Even in light of $4-per-gallon prices at the pump, consumers are buying," he said.

One of those offering a more cautious view said that "climbing oil prices and a presidential voting year have elevated my concern."

Half a dozen respondents cited a slowdown in European auto sales and Europe’s sovereign debt problems as a potential, if not actual, drag on their business in the North American Free Trade Agreement region, clouding an otherwise sunny view of the global automotive market.

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