HAMILTON, Ontario - The global auto industry offers 'tremendous opportunities' for suppliers who survive the ongoing shake-out and meet tomorrow's challenges, says the head of a growing megasupplier.
'Whenever there's change, there's risk, but there's also opportunity,' says Don Walker, CEO of Magna International Inc. in Aurora, Ontario. 'OEMs need us, and they know they need us.'
Automakers must continue to develop their supply base in order to compete globally, Walker says.
One major challenge for suppliers is to find ways to work with each other to improve efficiency and with automakers to eliminate waste.
'Wherever you look, there's waste. We need to examine the way we do things with the car companies, get the waste out of the system and, hopefully, share in the profits,' Walker says. He spoke at the Automotive Parts Manufacturers' Association of Canada's annual conference here this month.
Another challenge for suppliers is the demand that they do more development and production. 'We're seeing a lot of the responsibility for the technical side of the business shifting to suppliers. And this is emerging fairly quickly,' Walker says, pointing to automakers' demands for complete interiors, and in some instances complete vehicles.
'The only way to bring vehicles to consumers more quickly is to outsource major modules,' he says. This will happen more as old assembly plants are replaced. 'Manufacturers aren't going back to their old ways.'
Walker sees consolidation continuing among both manufacturers and suppliers. He says the top eight automakers now account for 74.0 percent of total world production, with a gaggle of smaller companies building the rest. 'As the industry continues to go global everybody's going to be buying everybody else up. And that's certainly going to be changing who we do business with.'
Consolidation will continue among suppliers as well, which will result in more tiering of the supply base as individual companies pick their niches. Says Walker: 'There will be a lot more global requirements for Tier 1s, as car companies truly produce global platforms, and we will be asked to support them globally.'