Page 54 - MetalForming April 2013
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Automotive Supply Base
“Suppliers report a significant improvement in the credit markets and believe there is available credit to support short-term production increases and long-term structural improvements.”
Showing flexibility, fewer OESA members believe they will face increasing out- and inbound expe- dited freight, component shortages and raw-material shortages in 2013. However, compared to 2012, a greater number of suppliers believe they will face production overtime premiums, skilled labor shortages and internal manufacturing-capacity constraints. Most concerning, 24 percent of the
respondents to the January 2013 OESA Automotive Supplier Barometer indicate concern about available liq- uidity in their sub-tier supply base.
Credit Market Favorable
In a major change from 2009, sup- pliers report a significant improvement in the credit markets and believe there is available credit to support short- term production increases and long-
term structural improvements. Seven- ty-one percent of respondents indicate a favorable lending environment with- out any significant issues. This com- pares to 55 percent that responded in the same way in 2012. Likewise, the percent of suppliers identifying con- tinued constraints in the lending envi- ronment declined from 32 percent in 2012 to 17 percent in 2013.
What remains as a red flag is the concern about the liquidity of sub- tier suppliers. Liquidity concerns result from a combination of opera- tional inefficiencies and the supply of credit. Suppliers who see this in their sub-tiers are increasing sub-tier monitoring and supplier development actions, and are providing direct injections of capital.
Overall, suppliers show confidence that they can access capital for their broad range of needs. Offshore manu- facturing operations and M&A actions are the only two areas where suppliers express less confidence in their access to credit. Generally, smaller firms have less confidence in their ability to tap the credit markets for needed capital than do larger firms.
As one OESA member recently noted, “It is still hard to get credit, the banks are still steering clear of smaller automotive parts suppliers.” MF
52 MetalForming/April 2013
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