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November 26, 2019 12:03 PM

Editorial: Cooper Standard a sign of changing automotive times

Rubber & Plastics News Staff
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    Leo Michael

    Cooper Standard made some moves that might become a more common occurrence among automotive suppliers if the global vehicle market continues to slow.

    The supplier of sealing, fluid transfer, and fuel and brake delivery systems still derives the vast majority of its revenues from automotive applications. As such, Cooper Standard's decision to shut down 10 manufacturing sites isn't that surprising.

    It revealed plans to close four in the U.S. and Europe. It will shut down six total in Asia, confirming that the five in China will be "mothballed," so they can be brought back into operation in relatively short order if the auto markets there rebound from their current state, a prediction some are forecasting to happen after 2020.

    Jeff Edwards, Cooper Standard chairman and CEO, said negotiations in China right now are possibly the most challenging they've been since he started doing business in China more than 20 years ago. The firm took a number of unfavorable one-time price concessions, and even discontinued one customer relationship because he said the demands were so one-sided.

    Edwards also said declines the firm has seen in light vehicle production has impacted Cooper Standard, including on some of the supplier's biggest platforms. Cooper Standard said light vehicle production is down 11.5 percent in China, 3.8 percent in Europe and 2.2 percent in North America.

    Raw materials prices hit Cooper Standard to the tune of $20 million for the first nine months of the year, and the strike at GM combined with the slowdown in China cost it roughly $26 million in sales. This mostly offset any gains the firm made in productivity within its manufacturing operations.

    Like many other suppliers, Cooper Standard is becoming more global. It's also restructuring from four regional units into two global units, one focused on automotive and the other dubbed its Advanced Technology Group, which will focus on non-automotive business.

    In the process, two of its regional leaders will leave the firm, and five other executives will leave the company by mid-2020, four by the end of 2019. The resulting organization will be flatter and enable Cooper Standard to adapt quicker to changing market conditions.

    Recent reports have shown that the global auto industry is slowing down faster than projected, with the International Monetary Fund saying the sector is a big reason why industrial output has not kept up with expectations.

    Continental A.G. said recently it doesn't expect light vehicle sales to see any tangible improvement for the next five years.

    If these gloomy forecasts hold true, Cooper Standard won't be the last auto supplier making major restructuring moves.

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