SOUTHFIELD, Mich.—Optimism is improving in the automotive supply base, though firms remain cautious given the latest market dynamics, according to the latest Automotive Supplier Barometer from the Original Equipment Suppliers Association.
Taken quarterly, the survey seeks responses from executives at North American automotive suppliers. This year the industry outlook index increased to 46 in the fourth quarter, six points higher than the third quarter but two points lower than fourth quarter 2016.
A neutral rating is 50.
Overall, OESA said opinions have become more optimistic across most revenue groups, though smaller companies were an exception. Despite the optimism, inventories, production volumes and the political environment are holding sentiment below neutral.
Suppliers are mainly focused on capital equipment purchases in meeting targets for the next 12 months. OESA said talent also continues to be a planning focal point as additional staffing for salaried and hourly personnel ranks as the next highest priority.
Suppliers remain active and engaged in assessing opportunities for acquisitions and divestitures compared to 2016. OESA said acquisitions are being driven by larger companies' desire to gain access to technologies and expand their customer base. Alternatively, smaller companies are driving divestment activities due to the need to consolidate core business and selling off non-core technologies.
"What we're seeing in the supply base is optimism from larger players keen to acquire new technology, as smaller companies focus on their core capabilities," Mike Jackson, OESA's executive director of strategy and research, said in a statement. "Overall, suppliers must carefully assess new business opportunities to ensure resources and capital investment are optimized."
The OESA Automotive Supplier Barometer analyzes the twelve-month business sentiments of top executives in the supplier industry. It is a bi-monthly snapshot of their concerns on commercial issues, the business environment and strategies that influence the supplier industry. This Barometer is distributed to vehicle manufacturers, financial institutions, governmental officials and the media to provide an ongoing profile of the trends in the supplier industry.
OESA champions the business interests of automotive original equipment suppliers. Since 1998, the Association has been addressing issues of common concern and advocating on behalf of the supplier community throughout the supply chain and in Washington.
OESA is one of four divisions of the Motor & Equipment Manufacturers Association.