As the auto industry works to find its way out of recession, automakers and suppliers alike will need to change the way they do business.
Federal standards will push carmakers toward lighter and more efficient cars, while consumers will demand more comfort and convenience.
That will put even more pressure on the industry to do more with what it already has, Maurice Sessel, vice president of advanced engineering for International Automotive Components LLC of Dearborn, Mich., said during the Society of Plastics Engineers' 2009 Automotive TPO Conference.
The industry event was held Oct. 4-7 in Sterling Heights.
IAC and its competitors cannot afford to invest million of dollars on new capital equipment for each contract, Sessel said Oct. 5.
“Somehow, we've really got to pick and choose where we're going to make our [research and development] investments,” he said. “We've got to really optimize what we can do with the capital we've already got.”
Consider the way things used to be, just a few years ago.
One of IAC's precursors (the interior supplier was formed out of former production units of Lear Corp., Collins & Aikman Corp. and UT Automotive, among others) spent millions of dollars at two different plants to make parts for a new vehicle.
Less than five years later, the car's interior was updated and much of that new investment was obsolete, Sessel said: “We can't afford to continually spend that kind of money on every refresh.”
Suppliers also cannot afford to refuse to make the parts carmakers want.
The challenge will be to make those parts — including ones that are lighter in weight, environmentally friendly and have the look and feel that consumers want — without going broke on new technology.
The entire auto industry needs to find out how to survive on smaller production volumes, David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said at the conference.
Between 1994 and 2007, automakers made more than 15 million cars annually. In 2008, that number dropped to less than 13 million.
Forecasts for 2009 by analysts with CSM Worldwide point to production of less than 9 million vehicles.
But even beyond the historic shakeout of this year, numbers are not expected to reach the old level until 2014 at the earliest.
“The new break-even number for the industry will be ... 10-11 million vehicles,” Cole said.
Copyright 2009 Crain Communications Inc. All Rights Reserved.