Q1 2020 OESA Automotive Supplier Barometer TM: Progress on Trade Boosts Supplier Sentiment

For Immediate Release

Contact:
Jeff Laskowski, 248.430.5951, jlaskowski@oesa.org
April Buford, 248.430.5964, abuford@oesa.org

Q1 2020 OESA Automotive Supplier Barometer TM:  Progress on Trade Boosts Supplier Sentiment 

SOUTHFIELD, Mich. (March 3, 2020) – According to the Q1 2020 OESA Automotive Supplier Barometer Index (SBI) – a gauge to measure the sentiments of North American automotive supplier executives – supplier sentiment was much improved from the fourth quarter of 2019 but remained pessimistic on net. Results posted a negative reading of 47 for the period; three points below a neutral reading of 50 but showed a 10-point increase from the previous quarter. The Q1 2020 index marked the seventh straight quarter of net pessimism but is 12 points higher than a year ago. 

Pessimism subsided on passage of USMCA and steps towards a trade deal with China. Firms with revenue below $151 million shifted into optimistic territory, while larger, more globally exposed firms, continue to show strong levels of pessimism. Regardless of revenue size, results improved from prior quarter. Sampling for the survey was conducted from the end of January until mid-February, when the impact of the Coronavirus was still unknown.  

The Q1 2020 OESA Supplier Barometer, sponsored by RSM US LLP, focused on Production, Planning & Electrification. The survey results indicate:  

• Poor sales in programs supplied overtook changes in government trade policy as the top industry threat, ​yet both improved sequentially. The coronavirus outbreak in China fueled higher international event risk.
• The primary internal and external production issue is a skilled labor shortage. Furthermore, the top three internal and external production issues are related to a tight labor market.
• R&D spending is unchanged from last year, remaining at 4% of total sales. The advanced material technologies category remains the top priority for future investment 
• Battery Electrified Vehicle program development is driving innovation across the supply base despite the lack of program profitability. 

“Automotive suppliers have been navigating acute trade policy uncertainty for the past two years. Passage of the USMCA and a first phase trade deal with China has fueled a sharp jump in supplier optimism. This illustrates just how foundational these policies are to provide certainty and clarity across sophisticated and highly-integrated regional and global supply chains,” said Mike Jackson, executive director, strategy and research, OESA. Despite the substantial boost to supplier sentiment, the barometer reading remains marginally negative as uncertainty persists. As the industry continues to change, adaptive suppliers affirm that dramatic shifts in product and process technologies can serve as valuable new sources of innovation and opportunity, especially as the pace of vehicle electrification accelerates.    

The Q1 SBI chart and a full copy of the Supplier Barometer results are available on the OESA website at: https://www.oesa.org/resource/oesa-automotive-barometer-studies. 

CLICK HERE to view the RSM US LLP commentary on the Q1 2020 OESA Supplier Barometer results. 

About the OESA Automotive Supplier Barometer:
The OESA Automotive Supplier Barometer captures the pulse and analyzes the twelve-month business sentiments of top executives in the supplier industry. It is a quarterly survey on commercial issues, the business environment and strategies that influence the supplier industry. This Barometer is distributed to vehicle manufacturers, financial institutions, governmental officials and the media to provide an on-going profile of supplier industry trends.

About OESA
The Original Equipment Suppliers Association’s mission is to champion the business interests of automotive original equipment (OE) suppliers. Since 1998, the Association has been addressing issues of common concern and advocating on behalf of the supplier community throughout the supply chain and in Washington, D.C. 

OESA is one of four divisions of the Motor & Equipment Manufacturers Association (MEMA). All divisions are represented by MEMA’s advocacy and emerging technology expertise.  For additional information, visit http://www.oesa.org.

About RSM US LLP
RSM US LLP is the leading provider of audit, tax and consulting services focused on the middle market, with nearly 10,000 professionals nationwide. It is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 41,000 people in 116 countries. RSM uses its deep understanding of the needs and aspirations of clients to help them succeed.