DUSTIN WALSH

Cooper-Standard exec thinks suppliers can navigate European turmoil

Dustin Walsh covers auto suppliers for Crain's Detroit Business, an affiliate of Automotive News.Dustin Walsh covers auto suppliers for Crain's Detroit Business, an affiliate of Automotive News.
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TRAVERSE CITY, Mich. -- Nobody from an auto supplier, manufacturer or consulting firm can avoid lamenting about Europe's economic strife and what it's doing to the global industry.

Supplier executive Lyle Otremba didn't hesitate, either, during an interview here at the Center for Automotive Research's 2012 Management Briefing Seminars.

"For everyone doing business in Europe, it's the same story," said Cooper-Standard's vice president of commercial and technical development. "There's still too much capacity, and the issue will be with us for a while."

Cooper-Standard operates more than 15 plants in Europe across all its product lines, including seals and chassis.

Otremba said all suppliers are looking at lowering capacity in Europe as the situation worsens but believes the industry will manage the situation fluidly.

Unless … the continent's more economically viable (not you, Greece) and auto-centric countries begin to default -- i.e., France and Italy.

"At this point, everyone will manage whatever happens to Greece. But if others start to fall, the other dominoes will start falling" around Europe, he said. "If that issue arises, where it starts sucking capital out of North America, we'll have a major problem. But if it stays reasonably managed, as it is now, we'll be OK. "

Otremba said Cooper-Standard and others are refocusing on the emerging Russian market to offset some of Europe's woes. Ford Motor Co. and General Motors Co. both announced they were increasing capacity in Russia earlier this year with car sales forecasts near a total of 3 million.

In North America, it's another story. Volumes are spiking -- LMC Automotive predicts 14.3 million in U.S. sales this year -- and suppliers are working to keep pace.

The drawback to the North American resurgence is one of labor. The entire industry is in competition over top talent, including engineers and skilled laborers, Otremba said.

"We need more engineers, and they are getting gobbled up and we're all fighting for them," he said.

Otremba said smart suppliers are looking to maximize their R&D investments by supplying other industries whose business cycle runs counter to that of the auto industry.

Cooper-Standard is refocusing on "cohesive" markets that can piggyback on what it already is manufacturing. For example, its performance products group is focused on aerospace.

You can reach Dustin Walsh at dwalsh@crain.com.

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