Pressure on automotive supply chain could hamper recovery
A combination of rebounding sales and an unprecedented number of new models is putting pressure on the automotive parts supply chain so taut that the entire industry is holding its collective breath that it does not snap and jeopardize the recovery, according to a recent article in USA Today.
New car sales are expected to reach 85 million globally in 2013 and exceed 15 million in the U.S. alone. In addition, a record 500 vehicle launches are expected by 2016.
The problem is that suppliers cut back during the recession and are now trying to ramp up to meet demand. As a result, a smaller number of suppliers with fewer facilities and personnel are struggling to handle a 22% rebound in the automotive industry. And some suppliers are cautious about increasing capacity in this boom-and-bust industry.
Manufacturers fear that if suppliers can’t handle the pace, vehicle launches could start slipping. For example, the Lincoln MKZ had parts and quality issues that left customers waiting. The launch of the new Jeep Cherokee has been delayed by a month.
Automotive Manufacturing Associations Collaborate to Accelerate Development of Regional Supply Bases in Southern States
In a related story, the Automotive Industry Action Group (AIAG) is partnering with automotive manufacturing associations representing the states of Alabama, Georgia and Tennessee to assist them in accelerating development of the automotive supply base in the southern United States. The collaboration will drive access to tools and education for southern automotive companies to become more globally competitive by improving quality and reducing costs.
“Industry forecasts show that automotive production in the South is expected to grow by as much as 85 percent over the next three years, and these associations want to ensure companies in this region have the skills and overall capability to support this growth,” said J. Scot Sharland, executive director of AIAG. “Individual operations are expected to deliver high standards of quality and world-class processes, and this effort is AIAG’s way of helping move the industry forward.”
