Economic Development and Manufacturing

Happy auto suppliers meet Thursday

March 1, 2013
| By Pete Daly |
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There shouldn’t be much wringing of hands at the 14th annual Automotive Suppliers Symposium at GVSU in downtown Grand Rapids Thursday morning — but there will be some cautions suggested by experts who carefully watch the U.S. auto industry.

Predicted production levels and light vehicle sales over the next two years “really looks good,” said Rich Antonini, managing partner of the Plante Moran Grand Rapids office.

Plante Moran is the title sponsor of the symposium, which this year is titled, “Ready, Set, Launch!”

Jay Moore, director of purchasing at Ford, heads the list of featured speakers, which also includes Paul Lambert, group vice president at auto supplier Johnson Controls; and Mike Wall, director of automotive analysis at global business information firm IHS.

The 14th symposium, put on by GVSU’s Van Andel Global Trade Center, will examine how the OEMs and their suppliers find and evaluate new business opportunities. A key part of the program is the current economic forecast as it pertains to global opportunities and potential risk. Industry leaders will offer insight into how they handle new product launches, enter new markets, undertake acquisitions and develop new business relationships.

Antonini said it appears to him that the U.S. credit market “has improved some,” making it easier for the younger generation to buy new cars. He added there are estimates that some light vehicle fleets, such as pickups, include many that average nine years or more in age, so there is “inherently pent-up demand for (new) vehicles.”

Wall said he plans to speak Thursday about the opportunities he sees in “a multi-speed world.” By that, he means the situations are different in Asia compared to the U.S.

In China and other developing Asian nations, where increasing numbers of consumers are able to buy cars for the first time, Wall said the auto industry is a high-growth, emerging market.

In this country, everyone still remembers the downturn of 2009 that proved devastating to many firms in the industry, “but, in general, we really have emerged much stronger,” he said.

Wall said that when looking at the auto industry worldwide, its recovery here is “little” compared to high-growth emerging markets overseas.

“The caution — the caveat that’s out there — is that we have Europe, particularly Western Europe,” where financial stability is still very much up in the air. “It is a big concern for both automakers and suppliers alike, and really anybody dealing with the global industry,” said Wall.

“We see the contraction (in the European economy) carrying forward, even this year,” he added.

Suppliers here should take that into account and plan for possible outcomes in Europe, which can impact business here. One local company that knows all about that is Gentex, a giant in the automotive specialty mirror industry, which has been dealing with continuing softness in its European market.

However, when Wall looks at the sales numbers in the U.S., he is practically exuberant.

“It’s growing. We’re in this very nice recovery mode. Last year we sold in the U.S. about 14.5 million vehicles, relative to about 12.8 million in 2011,” he said.

Midway through the first decade of this century, U.S. auto sales were hitting 16 million units per year, before the industry went over a cliff in 2008 and 2009, falling to little more than half the previous years’ sales.

“The big question is, when will we get back to 16 million a year?” said Wall. “Right now, vehicle sales are still doing quite well.”

Wall said IHS is predicting the sale of 15.2 million light vehicles in the U.S. in 2013, which he characterizes as slow but steady growth. “We’re really on the cusp of pivoting from ‘slow but steady’ to just simply steady — and moving along really nicely,” added Wall.

His firm, which does a lot of research into the worldwide auto industry, predicts the U.S. market to reach 16 million in sales “probably in the 2015 timeframe.”

“Very nice growth — and really, more importantly than anything, it is really very profitable growth, both at the automaker level and at the supplier level.

“One thing that gives us a little pause, a little concern, is: Will the suppliers be able to keep up with sales and production? It’s a good problem to have, but at the same time, you want to make sure you obviously are able to complete all the orders. And we may see some volatility as it relates to that, some spot shortages here and there on some components,” said Wall.

Antonini said good news for the U.S. industry is the increased willingness of overseas OEMs to use U.S. suppliers. Honda, Nissan and Mazda traditionally relied on Japanese suppliers for parts, but that is changing, partly in response to the massive destruction of the 2011 tsunami.

He said Asian and European OEMs are looking to produce more of their vehicles in the U.S. to meet new demand by U.S. consumers. “Ten or 20 years ago, it was difficult for a U.S. supplier to get entrenched with the offshore OEMs,” said Antonini. With that reversal, there are new opportunities for suppliers in this country.

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