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
Companies & Associations

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

Ford moving forward in carbon fiber for 'high volume' use

April 17, 2015 10:21 am ET

Ford Motor Co. has signed a deal with a carbon-fiber manufacturer to jointly explore “high-volume” automotive uses for the lightweight...    More

Image

German auto supplier opening first US plant

April 17, 2015 11:00 am ET

Automotive supplier EuWe Eugen Wexler U.S. Plastics Inc. is investing $11.1 million to open a manufacturing facility in Anderson County, S.C., the...    More

Image

Zoltek expanding CF capacity in Europe

April 17, 2015 10:12 am ET

Leading carbon fiber group Zoltek Corp. has signed a strategic agreement with the Hungarian government to expand its operation in northern Hungary,...    More

Image

Spain's Grupo Antolin to buy Magna's interiors business

April 16, 2015 12:33 pm ET

Spain's Grupo Antolin has reached an agreement to purchase Canadian auto supply giant Magna International Inc.'s interiors unit in a deal valued at...    More

Image

Hanwha Azdel adds capacity in Lynchburg

April 16, 2015 2:01 pm ET

Composite maker Hanwha Azdel Inc. will add space and a new production line at its Lynchburg, Va., production facility, the company announced April 16.    More

Market Reports

Trends in Resin Distribution

The growth of the North American resin distribution market is undeniable - and industry analysts are confident that growth will continue in 2015 and beyond.

This new report analyzes market trends and provides data on historical sales trends for PE (distribution and resellers), PolyOne Distribution figures, U.S. ethylene expansions based on shale gas and natural gas production by category to 2035.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 15, 2015 - September 17, 2015Plastics Caps & Closures - September 2015

More Events