Register now for free access to - this week only.

Are suppliers ready as the industry's engines come back up?

Automakers are hearing the ground rumblings that tell them that consumer demand is building again. Some 55,000 workers have been rehired by the Detroit 3. Chrysler has added a second shift at its Jeep Grand Cherokee plant. The company has decided it's going to need its Sterling Heights, Mich., plant instead of closing it in 2012.

These are all encouraging signs after the meltdown of 2008.

But another challenge now faces the industry: coaxing their battered parts suppliers back into expansion mode. Suppliers chopped off body parts, closed plants, exited side businesses and laid off engineers to survive the crash. Now, according to a recent survey published by the international consulting firm Roland Berger, many don't have the resources to get back into the game – particularly capital.

More than half of the suppliers Berger talked with say they have experienced deteriorating credit terms. A fifth of the firms said their credit lines have been cut.

“Some suppliers are simply incapable of growing right now,” observes Berger Principal Tom Wendt.

It was for different reasons, but the industry witnessed how the lack of little semiconductors brought down Nissan production on two continents this month. Nissan's U.S. sales have been strong and dealers eagerly wanted all those cars and trucks that couldn't be produced.

So imagine a landscape of small parts companies around North America unable to throw themselves into overdrive to respond to a flood of new orders from their customers.

Remember that old proverb? A kingdom was lost, all for the want of a horse-shoe nail.

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.