The Automotive Supplier Barometer from the Original Equipment Supplier's Assn. (OESA) took a nice jump, increasing in November to 52 from September's 37. However, the OESA notes that this shift was influenced from both spectrums of the two-month outlook: the "somewhat more optimistic sentiment" which increased from 16 to 25% and the "somewhat more pessimistic sentiment" which decreased from 55 to 16%. Optimism increased across most revenue groups with the exception of companies having $50 million-$150 million in annual revenue, the smaller suppliers.
Just as many automotive suppliers were recovering from the earthquake and subsequent tsunami in Japan, the flooding hit Thailand, causing more disruptions to the supply chain, and "influencing the somewhat increasing pessimism," said the OESA report. On the positive side, production volume increases are driving optimism among automotive suppliers.
Comments from the "Somewhat More Optimistic" of the survey's respondents include, "North America vehicle build continues to show increased production," and "North American automotive build forecasts for 2012 are up." One respondent attributed the growing optimism to "the prospect of a leadership change in Washington."
However, European volatility and the floods in Thailand are of concern for those who haven't been persuaded that things are all that rosy. "Would have liked to have grown more optimistic, but the European volatility is of concern," commented one respondent.
Among the "Somewhat More Pessimistic" crowd, one respondent cited "downward revisions to European and Chinese production forecasts" in addition to the disasters in Japan and Thailand that "have placed a near-term production ceiling over Toyota and Honda."
Pessimism is also arising from "customer price pressures and supplier financial issues" as well as "risk to the general economy - flat outlook" and EU debt crisis.
While staffing levels planned over the next six months continue to indicate that most respondent companies will be hiring for corporate engineering and technical positions, 70% are having trouble finding qualified available candidates for these jobs, compared to 42% for the same period in 2010. Problems also exist in trying to find skilled trades employees, with 57% of respondents are having trouble finding skilled workers compared to 35% a year ago.
Manufacturing localization - a "buy it where you build it" strategy that many OEMs are adopting - is strong with 84% of respondent companies seeing an increase in localization activity from their customers, and 58% are pursuing manufacturing localization with their supply base. Factors influencing this move, notes the report, include recent natural disasters and associated supply chain interruptions along with declining dollar value against other currencies.