HELP (REALLY) WANTED

Suppliers need more engineers to keep up with vehicle launches

Suppliers said the availability of “labor and talent” is a long-term problem.
Talent shortage
Suppliers were asked: What are the most significant product launch risks that your company is facing?
Launch issue cited as the biggest risk
Engineering talent37%
Production capacity17%
Global requirements7%
Technology development5%
Other25%
  
Electronics bottleneck
Suppliers were asked: Which components produced by your company are suffering from significant supply chain constraints?
Component% of respondents
No shortages32%
Electrical/electronics22%
Powertrain18%
Chassis8%
Exterior7%
Interior6%
Other7%
Note: The number of responses differed for each category
Source: Original Equipment Suppliers Association
Related Topics

The shortage of engineers and skilled workers is starting to look like a long-term headache instead of a short-term blip.

According to a May survey of 107 suppliers by the Original Equipment Suppliers Association, 37 percent said engineering talent was their biggest risk for upcoming product launches.

A lack of production capacity was cited as the biggest risk by 17 percent.

Suppliers cited the availability of "labor and talent" as a long-term problem that would persist in the United States through 2020.

In North America, the pace of new-vehicle launches is straining suppliers' engineering capacity, said David Andrea, OESA's senior vice president of industry analysis.

"It is not uncommon for the large Tier 1 suppliers to be launching one, two or three new part programs every week," Andrea said. "Suppliers are in a full-court press to hire new engineers."

So, are capacity bottlenecks to be expected this year? It's possible that short-term hiccups could affect production, but it looks as if suppliers are chugging along.

The median supplier is running at 90 percent of capacity, up slightly from 89 percent a year earlier, according to the survey. To maintain relentless pace, factories typically run triple shifts or weekend production.

More than two-thirds of OESA members "report they are running alternative labor schedules to squeeze every ounce of production out of their people and equipment," Andrea said.

However, those figures don't account for "warm-idled capacity," which includes unused assembly lines that could be restarted within three months at minor cost.

When warm-idled capacity is factored in, suppliers are currently operating at 80 percent of production capacity.

Suppliers could suffer some spot shortages, but there is still enough slack in the system to soak up extra production in the short run. But for the longer term, manufacturers are committing funds for new production lines and even new factories.

Suppliers are increasingly confident that North American vehicle production will top 17 million units over the next 30 months. And when that happens, Andrea predicts, "all available capacity will be back in use."

You can reach David Sedgwick at dsedgwick@crain.com.


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