This is a good time to be an automotive supplier. IHS Automotive projects that automakers will build 16.1 million cars and trucks in North America this year. That's up 4 percent from 2012 — and more than in any year since 2002.
Dennis DesRosiers, a Canadian-based auto analyst, said recently that two of the Big Three automakers are running at more than 100 percent capacity — meaning they're using a lot of overtime — and the third is close to capacity. The good news is fueling growth for the North American injection molding sector, which Plastics News ranks in a two-part special report that wraps up this week.
Last week we ranked the top 100, and I posted an item in "The Plastics Blog" noting that automotive molders reported a whopping 17 percent increase in sales in 2012.
A small part of that is related to rising costs, for sure, but it is clear that automotive molders are growing.
There's more growth this week: Our ranking of 460 smaller firms shows an average sales increase of 8.4 percent over last year. Anecdotally, we can report that this trend isn't just about growth at existing firms. PN has had quite a few stories recently about new molders joining the North American auto market. Some are overseas suppliers following growth at transplant automakers. Some are brand-new companies.
KPMG AG recently surveyed auto supplier executives and found that most are bullish about current prospects. They're hiring talented new workers again, investing in more efficient equipment and running their plants flat-out.
The North American automotive plastics sector is benefiting from more than unit growth. It's poised to pick up business from OEMs desperate to cut vehicle weight to improve fuel economy. Automakers also are expected to introduce lots of new models in the next few years, as they battle for consumers' attention — and for market share.
Are North American molders — and their supply chain — ready for Detroit's resurgence? They'd better be, because competitors in weaker global markets will have their eye on a piece of the pie.
Loepp is PN editor and author of "The Plastics Blog."