If 2011 was the year of the "black swans," then 2012 is shaping up to be the year of the launch.
Automakers this year will roll out 133 new vehicles, according to global projections from IHS Automotive Consulting. That's a huge jump from 85 launches in 2011, and it even tops the industry's halcyon days of 2006, when automakers unveiled 122 new vehicles.
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"We're launching a tremendous amount of vehicles right now, and it's not going to stop," said Michael Robinet, managing director of IHS Automotive Consulting, during the Center for Automotive Research's Management Briefing Seminars in Traverse City, Mich. "It's going to be a very active next couple of years for the supply base and for the OEMs."
It's hard to argue that the robust new-product pipeline is anything but a positive sign for an industry that was brought to its knees by the global recession just a few years ago. And projections that global light-vehicle sales in 2012 will surpass last year's record of 75.5 million units certainly point to a comeback that's in full swing.
But as demand bounces back from the recession, there's growing concern that the embattled automotive supply chain will struggle to keep pace.
"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," asserted 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. Morgan devoted an entire presentation to his concerns that many Tier 2 suppliers lack the modern production systems and continuous-improvement acumen needed to keep pace with the projected growth in vehicle sales.
"My concern right now is that the Tier 2 level of the industry is going to prevent, from a capacity standpoint, the move from 13 million to 15 million units," Morgan said, referring to short-term projections for light-vehicle sales in the United States.
"These [suppliers] need to be improved. It just needs to happen."
In his visits to automotive suppliers' factories, Morgan has found that many Tier 2s are getting by with crude, outdated production systems—or, in some cases, with no production systems at all.
Morgan presented two case studies of smaller suppliers "that are indicative of the kinds of people that can shut [OEMs] down on a regular basis."
One example was a stamping company that "barely survived the downturn" and was struggling to keep up with uptick in demand.
"What we found when we got there was a tired factory," Morgan said. "Processes had not been improved at all in several years. There was no single-minute exchange of dies. There was no evidence of continuous improvement. And they certainly had capital issues.
"This was a very unsophisticated management team. And there was no evidence of a production system."
Likewise, at a die-casting supplier, Morgan said he found "absolutely no evidence of a production system," although he acknowledged that the firm had a dedicated workforce and a hard-working management team.
To turn things around at the two factories, BBK emphasized continuous-improvement fundamentals such as value-stream mapping, right part/right time/right quantity, standard work and single-minute exchange of dies.
The bottom line, though, according to Morgan, is that many Tier 2 and lower Tier 1 suppliers are not nearly as sophisticated in their manufacturing processes as OEMs would expect them to be.
"A lot of the [suppliers] that are at 13 million right now aren't going to get to 15 million," he said.
