CHICAGO International automotive parts and components manufacturers have tempered their outlooks in the past two months as uncertainty over the economic slowdown in Europe and its impact on vehicle sales there have offset improved sales and production in North America.
Julys supplier sentiment index based on a survey of Original Equipment Suppliers Association (OESA) members fell to 55 from 60 in May. "As automotive suppliers begin to plan for 2013, many are developing budgets and strategies with caution," the OESA said.
North America production planning volumes are trending upward for the second half of 2012 and 2013. The 2012 median volume is 14 million vehicles, up 500,000 from OESA members January forecast, while the median volume for 2013 is 14.8 million vehicles, up 700,000 from the previous forecast.
Managing increases in volume continues to be at the forefront in suppliers decision-making. Hiring direct hourly employees was tied with purchasing new capital equipment as the highest priority for most survey respondents, according to Dave Andrea, OESA senior vice president of industry analysis and economics.
Ninety-seven percent of survey respondents anticipate higher revenues in 2013 and 92 percent indicated that they expect higher earnings before interest and taxes (Ebit) next year. Capital expenditures should continue at a steady pace in 2013, with 67 percent of companies looking at budget increases of 5 percent or less next year.
Some 54 percent of survey respondents expect steel pricing to rise next year, but the majority said those increases will be limited to between 1 and 5 percent over 2012 levels, according to OESA data.
Aluminum, magnesium and copper prices also are expected to remain in check, although more than 10 percent of survey respondents across each commodity forecast prices will be 6 percent or higher in 2013 compared with this year.