- Some Tier 2 suppliers lack the modern, efficient production systems and continuous-improvement focus needed to keep pace with the projected growth in vehicle sales, according to BBK's Guy Morgan.
- If vehicle demand continues to grow as expected, there's concern that these suppliers could be overwhelmed.
The feel-good story of the auto industry's comeback could take a dark turn if the OEMs don't take a hard look at their suppliers' abilities to ramp up in lockstep with demand.
That was the message from two speakers at the Center for Automotive Research's Management Briefing Seminars in Traverse City, Mich., where analysts projected that U.S. vehicle sales will exceed 14 million units this year -- up from 13 million in 2011 -- and will hit 16 million units by mid-decade.
If demand continues to grow as expected, there's concern that Tier 2 suppliers could be overwhelmed.
"The capacity that went offline in the last few years -- in some cases sitting idle or scrapped -- and the capacity that's going to have to come back online to support the continued growth is going to be the new pinchpoint in the industry," said Larry Jutte, president and COO of Ernie Green Industries Inc., a Dayton, Ohio-based automotive-parts supplier.
Guy Morgan, managing director and global operations advisory group lead for the consulting firm BBK, was even more emphatic, sounding the alarm that Tier 2 suppliers could "prevent, from a capacity standpoint, the move from 13 [million] to 15 million units."
"These people need to be improved," Morgan said during a panel discussion at the CAR seminars. "It just needs to happen."
