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Auto supplier sentiment flat but many still working overtime

Keywords: Tags  auto suppliers, automotive, steel, OESA, Original Equipment Suppliers Association, Dave Andrea, corinna petry

CHICAGO — Automotive supplier sentiment remained flat this month as delays in new vehicle program launches, Europe’s recession and the impact of federal budget sequestration held any optimism in check, according to the latest survey from the Original Equipment Suppliers Association (OESA).

The automotive supplier barometer sentiment index was put at 55, unchanged from January’s survey but 9 points below March 2012, according to Troy, Mich.-based OESA, which surveyed 102 companies.

Still, increasing vehicle sales and production levels—and stable growth in both—are encouraging for Tier I and II suppliers despite the economic headwinds, said Dave Andrea, OESA senior vice president and director of industry analysis and economics.

"We are still concerned about how much investment to make," one survey respondent said. "Are we still growing as an industry or getting near the top of the cycle?"

To meet current demand for parts, components and subassemblies, suppliers are creatively applying alternative work schedules. Sixty-three percent of responding companies said they are running alternative schedules: three-shift operations, four 10-hour shifts, 12-hour daily shifts, 24/7 operations or overtime schedules.

One company said it has added Saturday shifts to accommodate additional volume, while several others said they were running seven days a week with 10- or 12-hour shifts. One 24/7 operator said he is still adding capacity.

"We run three crews, but that is to match our customers’ (production). We do not quote business on an overtime basis unless the customer asks us to. Then we absolutely communicate it to our customers about that assumption to protect us if volumes change," another survey respondent said.

"We run what we have to in some cases. In others, we run what is most cost-effective for us and that is transparent to the customer," a third respondent said.

One respondent said he had to outsource tooling to other suppliers and his employees are still working overtime.

As a result, companies are spending more on hourly and salaried labor. One company reported that it is offering premiums to shift workers who volunteer to add hours to their schedules.

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