Suppliers indicated that key contributors to the ongoing uncertainty include frozen credit markets, risk of customer bankruptcy and concern that the economic stimulus package will not spur new vehicle sales. One respondent stated, "If conditions don't improve from this dismal level of sales, liquidity will run out because banks are not in the mode of increasing available credit, even if debt levels would not be high after exhausting available credit." Another added, "While we will be significantly affected by GM or Chrysler filing for bankruptcy, it is the effect it will have on the supply base -- which makes up a majority of our customer base -- that will really hurt us." The significant pessimism felt throughout the supply chain is reflected in the comment, "Eventually, a 50 percent to 60 percent drop in sales can no longer be offset by staff and other expense reductions without destroying the infrastructure of an organization."
"Automotive suppliers, which make up the largest manufacturing sector in the U.S., are in dire financial straits," states Neil De Koker, president and CEO, OESA. "Due to a non-functioning credit market, the sector is facing imminent financial hardship. This puts the entire U.S. auto industry at risk and makes the efforts to restore the U.S. economy much more challenging."
For additional information on the March 2009 OESA Automotive Supplier Barometer or other OESA surveys, visit http://www.oesa.org.
Formed in August 1998, OESA provides a forum for automotive suppliers by addressing issues of common concern through peer group councils, serving as a reliable source of information and analysis, providing an industry voice on issues of interest and serving as a positive change agent to the automotive industry. With over 400 members having global automotive sales exceeding $300 billion, OESA represents more than 65 percent of North American automotive supplier sales. For more information, visit http://www.oesa.org. OESA is an affiliate of the Motor & Equipment Manufacturers Association.
Web site: http://www.oesa.org/