WASHINGTON - Forecasters for the federal government see some danger in the rapid consolidation of automotive parts suppliers.
If manufacturers come to rely on a single source for a part, 'this could create monopolistic conditions, with reduced competition leading to higher prices.'
So say authors of the U.S. Industry and Trade Outlook '99, a more-than-800-page volume released last week by the Department of Commerce and its contractor, McGraw-Hill Cos.
The authors acknowledge that, for the moment, supplier competition is 'cutthroat' and will become even sharper with Delphi Automotive Systems and Visteon Automotive Systems becoming independent from General Motors and Ford Motor Co., respectively.
Overall, the report predicts a modest 1 percent gain in the value of motor vehicle shipments this year and 2.6 percent growth in auto parts shipments. Those projections are not adjusted for inflation.
By comparison, gains are projected to be 8.7 percent in computers and peripherals, 14 percent in printed circuit boards, 10 percent in radio and TV equipment, 10.2 percent in semiconductors and 6.9 percent in telecommunications equipment.
Commerce Secretary William Daley called the report 'good news for the U.S. economy.' Growth is predicted in more than 80 percent of manufacturing industries and in all major service sectors. Declines are expected in such areas as mining, newspapers and apparel.
The fine print contains cautions beyond the one about consolidation of auto parts suppliers.
Report authors note, for example, that there is no big, new untapped market for U.S. automakers as there was when women joined the work force and when baby boomers came of age.
They also say there are few export opportunities worldwide for the larger, more costly vehicles built in U.S. plants.
The report says U.S. plants will continue to assemble about 12 million vehicles a year, but by 2002 their share of total North American production will drop to about 72 percent, down from 77 percent in 1990. The numbers reflect primarily the growth in production in Mexico.