Happy new year? Wishful thinking, perhaps, if you're a supplier.
Last year's painful melange of Chapter 11 filings, Big 3 production cuts and surly, cost-cutting OEMs might soon be remembered as the Good Old Days, says a scary survey of top supplier execs.
Consultant Roland Berger and research firm SupplierBusiness.com surveyed about 100 senior supplier executives in December, and predictions for 2006 are grim:
- Seventy percent predicted Chapter 11 filings by Tier 1s will increase.
- Forty-three percent expect relations with OEMs to get worse.
- Execs fear they won't be paid adequately for r&d expenditures.
- They see price pressure from OEMs as the biggest challenge.
- Long term, they're worried about the restructuring of the business brought on by globalization. The major concern: OEMs will move more Tier 1 and Tier 2 sourcing to low-cost regions, particularly India, China and eastern Europe.