Industry Headlines

Auto Suppliers Pressured to Move Production Abroad

DETROIT-Pressure to move automotive manufacturing jobs abroad will continue, despite federal and local government efforts to maintain or increase industry employment levels in the United States, according to a report scheduled to be released at the 2004 SAE (Society of Automotive Engineers) World Congress, this month.

"The Odyssey of the Auto Supplier Industry," a study conducted by Roland Berger Strategy Consultants in cooperation with the Original Equipment Suppliers Association (OESA), a forum for more than 350 automotive suppliers, outlines global success strategies for automotive suppliers, is the result of online surveys and interviews with top management of OESA members.

"Nearly every supplier we've interviewed so far has indicated they are under increasing pressure to expand production outside North America," notes Wim van Acker, managing partner of Roland Berger's U.S. operations. "This trend illustrates a critical need for suppliers, especially small and medium-sized companies, to develop a new set of manufacturing strategies."

The forward-looking study will outline "best practices" for global automotive suppliers. van Acker explains that globalization of the supplier industry has evolved from multinational companies with regional operating groups to strategic enterprises bidding on global platforms.

"Large suppliers are well aware of the pressing need to act, and they are actively pursuing opportunities abroad," van Acker says. "A preliminary finding of the Odyssey supplier report is that small- and medium-sized suppliers will be impacted the most by these emerging changes. They will have to decide whether to move with their customers.

"But if they do move with their customers, how will they avoid the pitfalls that may derail their efforts to expand in emerging markets? In many cases, these companies do not have the financial and human resources to support global expansion. Nor can they afford even one failure."

The Roland Berger study will discuss trends in the global automotive supply chain; specific automotive component groups; which regions may win or lose; and what is driving the migration of automotive manufacturing jobs to locations outside of North America.

The Odyssey study seeks to help suppliers understand how their global manufacturing operations will need to change and how best to make those changes to survive and thrive. In addition, the Roland Berger report will list tools, techniques and equations to evaluate where a supplier should be outsourcing or positioning its global resources.

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