Page 33 - MetalForming Magazine February 2023 - Metal Forming for the Automotive Industry

Automotive Outlook
profitability while the EV market matures and can become a larger part of your portfolio.”
Many suppliers continue to focus sales efforts on their current customer base. The result: Suppliers can be left with risky concentrations and product mixes, says Alongi, which could be detrimental to enterprise value in the long term.
“And, at least in some part, we are seeing what the aftermath of Covid and global supply-chain disruption means to American manufacturing,” Alongi says. “Now more than ever suppliers have opportunities to grow with new customers and market segments, thanks in part to reshoring.”
Such opportunities exist not only in EVs but also in heavy equipment/ truck, medical equipment and solar, Alongi shares, to name just a few.
“Suppliers should be proactive and aggressive,” he says, “leveraging their pressroom technology to potentially explore new markets and customers. But the first step is to study and under- stand your risk level, and then strate- gize to move forward quickly and with direction.”
Not So Fast
For his part, Clay has tempered expectations for the EV movement. Instead, his team formulates the firm’s business model based on a mix of hybrids and EVs, while ICE vehicles remain prominent for the foreseeable future—similar to the forecast recently laid out by Toyota executives.
“While hybrids have smaller exhaust systems than do ICE-engine vehicles,” he says, “we aren’t planning based on
exhaust systems going away. In fact, the market for after-treatment systems for ICE vehicles has proliferated in recent years. And, like many suppliers, much of our profitability is tied to the large vehicles—SUVs and the like— and we don’t see that market shifting quickly to EVs.”
All of that said, Pridgen & Clay decided some 5 yr. ago to diversify away from light-vehicle systems in order to grow, and the company’s prod- uct mix now comprises some 30 to 35 percent in the heavy-truck segment— exhaust systems, after-treatment sys- tems and brake parts, “again,” offers Clay, “segments where we don’t foresee a lot of impact from the electrification movement.”
Diversification also is on the mind of Springer at Metal Flow, which has evolved from nearly 100-percent auto- motive to about 85 percent, “and as long as the margins are appropriate, we’ll continue down that path,” she shares. “Sure, there are other markets quoting high-volume stamping, but we don’t see the margins as being as exciting as they are in automotive, especially for the niches we work in— safety systems and fuel delivery.”
Electrification Risks
and (Potential) Rewards
Springer and her team have invest- ed time to categorize Metal Flow’s product mix into the three buckets noted by UHY, knowing full well that some parts ultimately will go away and the need to understand, first and fore- most, what platforms will hold on the longest in the market, and maybe even carry over to a hybrid-vehicle envi- ronment. “This will allow us to con- tinue to plan to produce for that prod- uct mix as long they need our support,” she says.
“We’re also carefully analyzing our pressroom technology to learn where we can leverage our capabilities in EVs,”
Springer continues. “We’ve been work- ing with EV-teardown companies to help us identify components that match our capabilities—in some cases for products we didn’t even know existed in the EV space. We also must consider that the EV supply chain will shrink, and that some of the newer EV OEMs produce a lot of their own components.”
Adds Clay: “While I see BEVs as potentially 20 percent of the market, at Pridgeon & Clay we are preparing for the development cycle to not be product-focused but instead process- focused. So, we’re working on opera- tions to ensure we’re exceptionally pro- ficient and a preferred place to work, rather than working on developing a new widget for EVs.”
Sotok and his team at Trans-Matic, while noting that the company is about 50-percent automotive, also perform a similar exercise to understand its risk with electrification, but also the poten- tial rewards. “While we do have a lot of parts that go onto ICE vehicles,” Sotok says, “and some, such as those for anti-lock braking systems and airbags will carry over, anything related to exhaust systems could be at risk— oxygen sensors, injector housings and other components for fuel-delivery sys- tems. We don’t see our customers investing in new designs for these com- ponents, instead investing elsewhere. Some 4 yr. ago, as we saw EV momen- tum gaining steam in other parts of the world, we began to closely study new opportunities for our expertise on EV platforms.”
Adds Springer: “How quickly the market transitions is critical to the deci- sions that we make and to the direc- tions we move in, so that we can uncov- er new opportunities in the EV space while at the same time not missing out on existing opportunities in the ICE space. We’ve, for example, seen 2024 end-of-life predictions of some plat- forms suddenly change to 2028.” MF
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Kevin Clay, CEO, Pridgeon & Clay: “Our forecasting model is solid and mature, allowing us to connect our part numbers to the specific platform forecasts. This puts us on a good path when we’re working to balance our raw, work-in-process and finished-goods inventories.”