suppliers sentiment took a significant step up in January
as the outlook in North America and Asia continues to improve,
despite ongoing woes in Europe and concerns about the political
environment on Capitol Hill.
The Automotive Supplier
Barometer Sentiment Index moved up to 55 from 51 just two
months ago, a substantial shift in attitude to "somewhat more
optimistic" from "somewhat more pessimistic." The index is
based on a survey of 108 companies by the Troy, Mich.-based
Original Equipment Suppliers Association (OESA).
But regional market risks remain
for suppliers, according to Dave Andrea, OESAs director
for industry analysis and economics.
"Things are positive in North
America and Asia," one respondent said. "Europe is still a
Contributing to the better
outlook was the governments resolution of the fiscal
cliff issue, which translated to higher confidence in 2013
production forecasts. U.S. auto output is expected to reach
15.2 million vehicles in 2013, a slightly conservative number
compared with forecasts from independent forecasting
consultancies, the OESA said.
Such expectations, along with
tight capacity utilization, indicate there will be production
constraints within the supply chain again this year, but that
will lessen as manufacturing and engineering capacities are
being added, according to the survey. Those constraints are
expected to appear primarily in the material markets,
powertrain/engine components and chassis systems.
Fewer respondents expect to face
raw material shortages this year, but they anticipate having to
deal with production overtime premiums, skilled labor shortages
and internal manufacturing capacity constraints.
Suppliers are trying to hire
workers to boost physical production capacity and productivity,
the survey results show.
Respondents whose outlook has
not changed in the past 60 days said they will wait to see what
impact tax changes will have on consumer confidence, adding
that they also are concerned about truck demand. They also
noted that several new model launches have been pushed back up
to six months, and dealer overstock is of concern as
wellas is the current volatile environment in
Companies that conduct business
in Europe are taking steps to address lower automotive demand
and vehicle sales there. Such steps include layoffs at European
operations, shifting resources from Europe to North America,
refocusing acquisition strategy to North American targets, and
"making sure we dont overcommit to (original equipment
manufacturers) in the form of capital/tooling investment,"
One survey respondent said his
company is sourcing more from Europe as European-produced
materials and finished products are looking for an outlet.