Increased globalization and the consolidation of vehicle production at fewer facilities around the world will create tremendous business opportunities for automotive suppliers in North America – at least those who adapt to the changing manufacturing landscape.
That was the message from auto industry executives and analysts who spoke March 4 at the 16th Annual West Michigan Automotive Suppliers Symposium. Warner Norcross & Judd co-sponsored the event, which was held at Grand Valley State University’s Van Andel Global Trade Center.
By 2022, half of the world’s new vehicles will be produced on 26 global manufacturing platforms, said Mike Wall, director of automotive analysis for IHS Automotive. He said North America is home to 9 of the world’s 10 largest automotive manufacturing platforms and, as a result, is well-positioned to benefit from increased consolidation.
“There are huge opportunities for suppliers in the North American market,” Wall said.
The North American auto industry is booming: sales are up and manufacturers could produce a record 17.4 million cars and trucks this year, Wall said. Vehicle production is also on the rise globally and that trend is expected to continue.
The “new domestics,” European and Asia-based automakers that manufacture vehicles in North America, are closing in on the Big Three automakers as the leading producers in North America, according to industry data. Wall predicted that foreign-based OEMs will account for most of the increase in North American vehicle production over the next several years.
Michael Dorney, director of global business development for Lacks Enterprises, Inc., recommended that automotive suppliers in Michigan who want to increase sales to “the new domestics” establish a local presence in the countries where those companies are headquartered.
“Just as politics is local, all selling is local,” Dorney said. “Frankly, people like to buy products from people who are like themselves.”
Ed Wulbrecht, vice president of quality control at Subaru, said foreign OEMs are shifting vehicle production to North America as part of a “build it where you sell it” philosophy. Consistent with this approach, Subaru’s production facility in Lafayette, Ind., which produced 265,000 vehicles last year, is undergoing a $791 million expansion.
“We think the North American market (for new vehicles) is going to be strong for a long time,” Wulbrecht said.