SOUTHFIELD, Mich.—The Original Equipment Suppliers Association's latest Supplier Barometer Index shows a more pessimistic supplier outlook because of trade policy impacts and uncertainty.
The barometer, a quarterly survey of executives at North American automotive suppliers on their 12-month outlook, posted a negative reading of 39 for the fourth quarter of 2018, eleven points below a neutral level of 50.
"Policy uncertainty and rising cost pressures can contribute to a chilling effect on additional business investment, serving to disrupt market momentum and increase volatility throughout the supply chain," Mike Jackson, OESA's Executive Director of Strategy and Research and author of the study, said in a statement. "Suppliers are encouraged to actively mitigate risks while seeking opportunities to identify and leverage market imbalances."
Despite strong economic fundamentals—including record low unemployment, near record high consumer confidence and strong vehicle demand—OESA said the SBI in Q4 2018 continues to reflect negative sentiment over the administration's trade policy agenda and poor sales of vehicle programs supplied.
OESA said concerns remain over supply chain risks, higher commodity prices, the impact of Section 232 and Section 301 tariffs, as well as policy and implementation uncertainty surrounding the new USMCA accord. Moreover, weak demand for passenger cars continues to negatively impact suppliers. Each element of uncertainty clouds the planning environment, causing automakers and suppliers to reassess, update and potentially disrupt business investment planning until greater clarity can be determined.
The OESA Automotive Supplier Barometer seeks to capture the pulse and analyzes the 12-month business sentiments of top executives in the supplier industry. It is a quarterly 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 on-going profile of the trends in the supplier industry.