Regional suppliers are under more pressure “to act global and be global,” says IHS Automotive’s Michael Robinet.
Robinet: suppliers and auto makers should talk things over.
TRAVERSE CITY, MI – Auto suppliers, forever an industry life source, are exerting more influence today in a growing global market.
So says analyst Michael Robinet, managing director of IHS Automotive, at the Center for Automotive Research’s Management Briefing Seminars here.
“Suppliers have a lot more leverage than three or four years ago,” he says, advising them to assess their portfolios and strategically decide which auto makers to work with.
“Find your relationship from a technology standpoint and client mix,” Robinet says, adding that frank talks with auto makers can be difficult, but are necessary.
“You should have open and honest discussions as to how you want your portfolio to look in the future,” he says. “Most auto makers appreciate that.”
Some things seem deceivingly apparent. “But sometimes, the obvious is not where you want to focus your activities,” Robinet says. “Something else may make strategic sense. Modify your portfolios going forward.”
Regional suppliers are under more pressure “to act global and be global,” he says. “Grasping the next level of global structures will determine success. Regional suppliers in many sectors will be required to truly function as global entities.”
He points to the increased production of global cars, vehicles built on common platforms and sold in markets around the world.
In 2000, global platforms accounted for 20% of U.S. production, mainly by Japanese auto makers at transplant factories. Today, that figure is nearly 50%, and by 2016, it will top 60%, Robinet predicts, saying pickup trucks will remain as vehicles manufactured for regional markets. “Global platforms drive the new reality.”
As auto makers increase their worldwide efforts, they will “require greater clarity and transparency within the supply base.”
The race for the emerging Asian market is not over for auto makers and suppliers. North America remains a “good environment for vehicle sales and production,” Robinet says. “U.S. expansion will continue at a modest pace.”
Europe is another matter. “We saw this coming,” he says of that continent’s financial woes. “You’ll see a real sense of urgency as Europe struggles.”
All suppliers are important, although the smaller ones often are overlooked until something goes wrong and disrupts production of even a few parts, Robinet says, citing last year’s natural disasters in Japan and Thailand.
“If there are 10,000 parts on a car and an auto maker has 9,999 of them, you still can’t build a vehicle.”
The industry can take pleasure in its recovery but shouldn’t “lean back and enjoy it too much,” Robinet says. “You’ve got to keep at it.”
He’s unimpressed with the vying to claim the title as the world’s No.1 auto maker.
“There is this whole contest ofbeing bigger than , which is bigger than . But who cares, especially if you are selling 7 (million) to 8 million vehicles?”
First place in the standings hardly matters “if you have global platforms, system flexibility and margins.”