Suppliers’ optimism declines as hiring and expansion plans continue
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DETROIT -- Automotive suppliers in North America are less optimistic than they were in May, but they still plan to hire workers and expand production, a recent survey by the Original Equipment Suppliers Association concludes.
In July, the industry group in suburban Detroit published its bimonthly barometer of supplier attitudes, based on a survey that drew 79 responses.
The group's Supplier Sentiment Index fell to 55 in July, from 60 in May. But the index remained above 50, which indicates a modestly positive outlook for 2012 and 2013.
While the U.S. economy has slowed a bit, North American suppliers are more nervous about Europe's stagnating economy, said David Andrea, who authored the survey.
"Companies are worried about the interrelationship between their European and North American operations," Andrea said. "They're getting cautious."
Small companies were more pessimistic than big manufacturers, but suppliers as a group have been positive since September 2011, when the index was 37.
According to the survey:
• Twenty-eight percent said their top priority this year is to buy capital equipment, while an equal percentage said their most important priority is to hire more hourly employees.
• Ninety-one percent said that affordable capital is "very accessible" or "generally accessible," an indication that they can get credit to buy equipment, make acquisitions and obtain new component contracts.
• Ninety-three percent are hiring hourly workers, and 78 percent are adding salaried employees.
• Forty percent said there was either a high or a modest likelihood of making a significant acquisition, while 10 percent said there was a high or modest likelihood of selling an operation.
• The median breakeven point for respondents is 11.2 million vehicles in North America, an indication that most suppliers remain profitable.
You can reach David Sedgwick at dsedgwick@crain.com.
