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February 27, 2015 01:00 AM

Automotive suppliers optimistic about 2015

Automotive News Report
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    TROY, Mich.—As North American light-vehicle output remains strong, suppliers are optimistic about their prospects for the coming year and are unfazed about meeting higher production quotas.

    According to a January survey of 85 suppliers by the Original Equipment Suppliers Association, 46 percent said they were more optimistic about their business outlook over the next 12 months than they were in November.

    Only 5 percent were more pessimistic and 49 percent said their outlook was unchanged.

    Suppliers' manufacturing capacity appeared to be roughly in harmony with automakers' production plans. The typical respondent estimated production at 85 percent of capacity—down from May 2014, when survey respondents were operating at 90 percent.

    Likewise, suppliers appear to be controlling production bottlenecks. Twenty-seven percent said they were worried about capacity constraints—down sharply from 2014, when 53 percent were concerned about it.

    But the industry's perennial engineering shortage appears to be as bad as ever. Sixty-nine percent of respondents said they expect to suffer a shortage of engineers over the next 12 months. “The lack of engineering talent and skilled labor shortages continue to be top-of-mind,” the survey noted.

    Suppliers are especially concerned about new-vehicle launches, which are high-stress events for any supplier's engineering team.

    Although the survey did not ask the suppliers whether they were raising wages, four companies noted that they had raised compensation to retain talent.

    Suppliers noted a number of other production problems, but none appeared as vexing as the shortage of engineers. According to the survey, 33 percent were concerned about possible shortages of components over the next 12 months, up from 23 percent in 2014.

    Some other conclusions:

    • Only 48 percent expected to pay overtime production premiums, down from 70 percent last year.

    • Only 58 percent feared skilled labor shortages, down from 71 percent in 2014.

    • Only 31 percent expected shortages of hourly labor, up from 28 percent last year.

    • Only 32 percent expect to pay higher costs for express shipments of components to customers, down from 37 percent last year.

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