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Auto suppliers worry over EU, invest in America

Keywords: Tags  Original Equipment Suppliers Association, OESA, Dave Andrea, investment strategy, sentiment index, vehicle demand, Corinna Petry


CHICAGO — The persistent financial woes of some European nations have begun to move the needle on how automotive suppliers are planning their investments over the next couple of years.

Some will hew closely to their North American base of operations, which presents a more positive picture for vehicle demand, according to a survey of members of the Troy, Mich.-based Original Equipment Suppliers Association.

The OESA’s sentiment index increased to a near-neutral 51 in November from 46 two months earlier, largely the result of an increasing number of members who said their outlook was "unchanged" and a decline among members who previously deemed themselves "pessimistic," according to David Andrea, the trade group’s senior vice president for industry analysis and economics.

The North American market continues to be viewed as more stable with growth opportunities, while the European economy remains a concern, survey results indicate.

Asked how the European economic crisis had affected North American business planning and investment strategies, most global companies indicated some level of concern, ranging from cautious monitoring of the market to a more deliberate response of limiting investment.

Some companies’ North American operations aren’t affected, while others view the European crisis as an opportunity to grow their business in North America.

There is "more investment in the U.S. due to relocation of business from Europe," one survey respondent said. Several others discussed greater "localization" of material and component sourcing within North America not only for the Big Three domestic automakers but also for Japanese and German transplants.

"Most believe Europe’s recovery is a long-term endeavor," Andrea said. "Increasing investments in North America is still a predominant strategy in the areas of plant and equipment, product development, and talent and training, with the majority of respondent companies planning some level of increase."

The survey showed that Europe will see declining investments over the next five years, South American investment will decline at a slower pace than Europe, and North America and Asia/Pacific likely will have stable to increasing capital expenditures.

North American localization of manufacturing and supply chain pull continues to rise, driven by sourcing strategy, best-cost country sourcing, logistics and foreign currency exchange risk, according to the survey.


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