S&P sees U.S. auto suppliers' growth slowing

Theresa Clift

Published: September 26, 2012 6:00 am ET

Related to this story

Topics Automotive

DETROIT (Sept. 26, 11:45 a.m. ET) — Standard & Poor’s expects earnings growth to slow at U.S. auto suppliers the rest of the year and into 2013, but most should not suffer credit quality downgrades because of it.

The lag in earnings will be caused by overseas business risks, the corporate credit ratings agency said.

“Following the Great Recession, these companies benefited from higher auto production after the multidecade lows of late 2008 and early 2009,” S&P credit analyst Nishit Madlani wrote in a report last week. “Most successfully reduced their break-even sales volumes while improving their credit ratios, building up their cash balances, and refining debt.”

Since August 2009, S&P has raised its ratings on nearly 75 percent of U.S. auto suppliers, but ratings on about one-third of them are still lower than they were in March 2008.

The report confirms what the Original Equipment Suppliers Association, a supplier trade group, has been hearing from its members.

Although costs were cut dramatically as the industry downsized during the recession, North American light-vehicle production has climbed about 71 percent from 2009 to 2012, OESA President Neil De Koker said in an interview.

“Things are very good for most suppliers in North America,” De Koker said. “Suppliers are being very careful about adding additional capacity and overhead.”

Suppliers at the greatest risk are those most exposed to Europe, where the industry is riddled with excess factory capacity and light-vehicle demand is slumping.

“This will continue to put significant pressure on profitability of the entire automotive sector in Europe until these adjustments are executed,” De Koker said.

Sweden’s Autoliv, which makes seat belts, airbags and other car safety equipment, said last week that the European market has been worse than anticipated in the third quarter while the U.S. market has been better than expected, according to Reuters.


Comments

S&P sees U.S. auto suppliers' growth slowing

Theresa Clift

Published: September 26, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Magna expanding interiors site in Slovakia

July 29, 2014 1:47 pm ET

Magna International Inc. plans to nearly double the size of its manufacturing facility in Trnava, in western Slovakia, to accommodate new automotive...    More

Magna hiring at two Michigan locations

July 28, 2014 11:43 am ET

Magna Interior Trim Components is adding a total of 169 jobs to two of its Michigan manufacturing facilities.    More

Image

Metals and plastics company NN to buy Autocam in $300 million deal

July 25, 2014 10:07 am ET

A Tennessee metals and plastics company said it has agreed to acquire auto parts supplier Autocam Corp. in a deal valued at $300 million.    More

Image

Chinese auto suppliers growing in US

July 24, 2014 4:17 pm ET

Two China-based automotive suppliers are expanding in the U.S., according to information released by the Michigan Economic Development Corp.    More

OSHA probes alleged asthma link to Lear's Selma, Ala., plant

July 23, 2014 11:58 am ET

U.S. foam manufacturer Renosol Seating LLC is being investigated following allegations its workers are at risk of asthma from TDI exposure at its plan...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events