There have been quite a number of headlines of late about risk and renaissance in the automotive supplier community. When new bulbs eventually begin to break through the frozen economic tundra of the nuclear automotive winter, supply markets will definitely return. In their wake, however, will be the carcasses of many who failed to stock enough provisions during the cold spell. This point is particularly relevant for all companies higher in the manufacturing food chain, as lower-tier suppliers in the automotive market are often the same suppliers delivering parts and materials to other industries, including A&D and diversified manufacturing. Still, it is worth stepping away from our current challenges and asking what the future automotive supply chain will look like once the market returns.
A recent Dow Jones Newswire story suggests that we might be in for a new auto-parts renaissance in the coming decade. According to the article, “U.S. billionaire investor Wilbur Ross, who operates a global automotive supplier, is still sticking with his bet on the automotive industry, saying the sector will experience a renaissance over the next 10 years.” The renaissance won’t come quickly enough for some, however, because “regarding suppliers, Ross said he expects more bankruptcies as the problem of excess capacity remains. He expects larger suppliers to buy assets of failing companies as they expand globally to match pushes by Ford and GM to build more global cars.” This is particularly interesting, because “[these global cars] such as the Ford Focus, are built and sold around the world using common parts, so that a car built in China is almost identical to one built in the U.S.”