Auto industry expert shares global insights during symposium
West Michigan’s auto supplier community has to stay nimble, or there’s a chance it will be left in the dust as the original equipment makers jockey for position.
During his presentation at the 17th West Michigan Automotive Suppliers Symposium, hosted by Grand Valley State University’s Van Andel Global Trade Center, Chris Hall, vice president of corporate strategy for MOTUS Integrated Technologies, shared a list of headlines from the previous year related to OEMs, along with a stern warning.
“If the first time you learn this is as a headline, it’s too late.”
Hall emphasized suppliers have to know where their customers are moving before everyone else does if they want a shot at their business.
He said OEMs are fast moving and by the time an announcement is made, they’ve already engaged suppliers and begun making plans for who will be part of their move.
Being able to move with a supplier is crucial, Hall noted.
“The Tier 1 and Tier 2 manufacturing landscape follows OEM expansion,” he said. “Keep your eye on where customers are going and be ready to follow.”
Hall said right now, OEMs are focused on a couple of locations around the globe for growth.
In Europe, the focus is on Eastern European countries, where volumes are growing at a faster pace than at their Western European counterparts. Additionally, those countries offer low-cost labor.
In North America, Hall said vehicle volume growth is primarily occurring in the southeastern United States and in Mexico.
“A lot of OEMs are moving into Mexico,” he said.
He noted companies should be careful about selecting a location in Mexico, however, because infrastructure is not the same there as it is in the United States. Specifically, he said companies have to be aware of how well a product will ship when making decisions about locations.
Hall was cautiously optimistic about China, noting that, although the auto market has slowed to some degree there, it is still a growing market. He also said it is a more challenging market to enter, with a lot of opportunity for failure.
“Be strategic about China,” he said. “We are looking to grow in that region, but we are taking our time.”
He also emphasized the need to hire locally when going into China.
“You have to hire people from the region who understand the culture and business there,” he said.
When looking at opportunities for growth, Hall said mergers and acquisitions would be an extremely important tool.
“A lot of these regions are saturated, so you have to take business from someone,” he said.
He recommended finding a company to partner with or to purchase, particularly when looking at entering Eastern Europe.
In his predictions for merger and acquisition activity, Hall said such activity has been flat for the past few years and, unless the industry takes a turn, he expects it will remain that way for the time being.
Hall also advised companies to dedicate resources and money to research and development, saying it is an area in which no one can afford to fall behind.
“In a recent survey of roughly 60 top suppliers, executives deemed research and development as the most important factor supporting sustainable growth,” he said.
He said suppliers shouldn’t just be concerned about having a diversified customer base, but should also recognize where they fit into their customers’ diversification strategies.
He said customers don’t want all their business with one supplier either, and will be looking to diversify their supply base if it’s too concentrated on one customer.
Overall, Hall said, suppliers must keep their eyes on the road ahead.
“You have to have someone focused on where you are going to guide the leadership team,” he said. “If you miss a sourcing opportunity, it will be a long time before it comes around again.”