By: David Sedgwick
August 13, 2013
TRAVERSE CITY, MICH. — Buying equipment and adding workers are North American automotive suppliers' top priorities as production orders soar, according to a survey by the Original Equipment Suppliers Association.
But financing expansion or construction of factories ranked lower on the list, said David Andrea, the association's senior vice president of industry analysis, who described suppliers' strategies last week at the CAR Management Briefing Seminars here.
Plant "expansion is not considered a key action," notes the survey, which was based on responses by 96 companies in July. "As one respondent noted, 'We already have the footprint; now we need people.'"
According to the survey, suppliers' top priority is to buy production equipment, followed by hiring salaried and hourly workers. Plant expansions ranked fifth, while construction of plants was seventh.
The bottom line: Suppliers are willing to expand production but are leery of big investments, so automakers and suppliers will have to plan for tighter production capacity.
"I don't think anyone wants to go back to the time when we had 25 percent excess capacity," Andrea said. "But we do have to fix the production constraints for those at the upper end of their capacity."