CEOs Plan for 2012; Many Uncertainties Ahead
Margaret Baxter, OESA

The OESA CEO Council held its first meeting of 2012 in conjunction with the North American International Auto Show.  The meeting included a formal business meeting and member roundtable, followed by executive tours led by IHS Automotive industry experts.

Traditionally, CEO Council members have used the first meeting of the year to share thoughts on the challenges that they see in the coming year.  This meeting was no exception.  Top challenges facing suppliers this year include:

Capacity Planning
As production numbers rise, some OEMs have forecast production numbers that do not seem realistic, while others have releases that vary significantly week-to-week.  This, coupled with an unclear picture of lower-tier capacity and long lead-times needed for tools and equipment, creates some uncertainty for tier suppliers.

Employment and Training
CEOs have predicted that a lack of skilled talent in this industry may be the single most influential problem to limit potential growth.  All CEOs agreed that it is difficult to find qualified personnel for key positions, mainly technical.

Stingy Banks
Some CEOs indicate that their lenders are still very cautious about lending into this industry, and that some customers are more “bankable” than others, meaning that banks look closely at the suppliers’ OEM customers as a way of judging the company’s financial viability.

Uncertainty in Europe
Although CEOs agree that the economic woes in Europe will likely be sorted out in the relatively near term, the effect of European bank insolvency is a wildcard.  Much of this will not affect the supply chain, but European-based suppliers find themselves explaining European economics to their customers.

Uncertainty in Mexico
Security concerns in Mexico still plague companies.  CEOs had questions about further investment in Mexico, and shared information about the scope of the security concerns in the country.

Other issues discussed included OEM launch schedules, material prices, global contracts and health care costs.

The CEO Council meets three times annually and is open to the most senior executive in charge of North American OE business for OESA regular member companies.  To audit the May 9, 2012 meeting, or for more information, contact Michelle Maki at 248.952.6401 ext. 229 or mmaki@oesa.org.