Auto suppliers now say they're eager to add capacity

David Sedgwick
AUTOMOTIVE NEWS

Published: November 18, 2013 10:34 am ET
Updated: November 18, 2013 10:35 am ET

Related to this story

Topics Automotive

DETROIT ‒ Automotive suppliers have been content to let their plants run around the clock rather than build new factories or assembly lines to meet high demand. Until now.

According to a September survey by the Original Equipment Suppliers Association, 84 percent of suppliers doing business in North America said they are "somewhat" or "very confident" that their companies will make capital investments in 2014 and 2015.

An additional 11 percent said they were "slightly confident" they would add capacity, and only 5 percent said they did not plan any capital expenditures.

Survey respondents were more willing to invest than they were in July, when 66 percent were planning for "significant" or "somewhat increased" capital investments.

The upbeat survey comes at a time when North American light-vehicle production is on course to hit about 16.1 million units this year, up from 15.5 million units in 2012, according to LMC Automotive, a consulting firm based in suburban Detroit.

In 2014, North American vehicle production is expected to rise 3 percent to 16.6 million units, says LMC.

As demand rises, automakers are planning to expand capacity in years to come. According to a Morgan Stanley study, carmakers in North America will add 864,000 units of capacity in 2014, plus 400,000 units in 2015.

So it comes as no surprise that the OESA survey, which drew 85 responses from OESA's 450 members, showed suppliers at their most optimistic since January 2012.

Sixty-four percent said they had grown either "somewhat" or "significantly more optimistic" about their prospects for the next 12 months. In July, only 44 percent of respondents were more optimistic.

The survey also suggests that suppliers are struggling to keep up with demand. One respondent said his company was "busting at the seams," while another said "our growth plans continue to be aggressive."

Asked to identify their most pressing needs, 29 respondents said they were focusing on personnel issues, such as hiring more engineers, retaining employees and attracting skilled trades.

Fourteen suppliers said capacity constraints were their most serious challenge, and 11 identified product launches as their top concern.

Neil De Koker, CEO emeritus of OESA, said in September that North American automakers couldn't add any more workers to existing assembly plants and now must build new ones. "Now it's bricks and mortar," De Koker said.

At the time he was referring to North American automakers. Now it's true for suppliers, too.


Comments

Auto suppliers now say they're eager to add capacity

David Sedgwick
AUTOMOTIVE NEWS

Published: November 18, 2013 10:34 am ET
Updated: November 18, 2013 10:35 am ET

Post Your Comments


Back to story


More stories

Image

Illinois injection molder expands

July 21, 2014 1:23 pm ET

Automotive supplier All-Rite Industries Inc. has added two new injection molding machines to its operations.    More

Image

More head-up displays going into cars, with improved information, graphics

July 21, 2014 10:48 am ET

Head-up displays with "augmented reality," the technology that employs much of the windshield as a display area for data and images, is poised to...    More

Image

This is one bump that looks good on a car

July 18, 2014 1:34 pm ET

PSA Peugeot Citroen Group is using plastic for both design and protection on the exterior of one of its newest cars.    More

Image

New Smart cars start production

July 18, 2014 10:46 am ET

Daimler AG has launched new versions of its Smart ForTwo and ForFour city cars, which, as in previous models, make extensive use of plastics in...    More

Image

Continental Structural Plastics buying 5 Magna SMC plants

July 17, 2014 4:35 pm ET

Automotive and construction supplier Continental Structural Plastics has signed an agreement to buy five sheet molding compound facilities from the ex...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

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

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

More Events