An additional 35 percent expect either a "lost decade" of near-zero growth or an erratic boom-and-bust scenario. Only 20 percent of the suppliers expect the growth rate to return to pre-recession levels.
Suppliers think "we're going to climb out of this slowly," said David Andrea, OESA's senior vice president of industry analysis. "They are very cautious in terms of investments, mergers and acquisitions."
Every two months, OESA, of suburban Detroit, surveys its membership about their business expectations.
Suppliers with annual revenues exceeding $500 million were somewhat more pessimistic about the future, while suppliers with revenues under $150 million were more optimistic, the latest survey found.
Over the next 12 months or so, suppliers are most worried about industry sales and the pace of the economic recovery. Those top issues are followed by concerns about raw material prices and the ability to meet rising production schedules.
As part of its survey, OESA also compiles a barometer of supplier expectations for the next 12 months. September's supplier sentiment index was 52, down from 58 in July but still positive. Any score over 50 means suppliers are positive about the future and expect to see growth.
"There is uncertainty about vehicle sales and production," Andrea said. "Suppliers hired back hourly workers to support production ramp-ups, but they have been very selective about hiring salaried workers."
The index fell as low as 23 in March 2009, when Chrysler Group and General Motors were preparing to enter bankruptcy. Then the index rose to 73 in January , when the U.S. recovery looked more robust.
Suppliers have reason for caution. According to an updated forecast by IHS Automotive, of suburban Detroit, North American assembly plants will produce 2.8 million vehicles in the last three months of 2010, up just 3 percent from the year-earlier period.
General Motors Co. is expected to produce 667,000 vehicles, up 9 percent, while Ford Motor Co. is forecast to raise production 4 percent to 595,000.
Toyota Motor Corp., North America's third-largest producer, is expected to cut fourth-quarter output 19 percent to 342,000. The downturn is due to the shutdown of Toyota's NUMMI plant in Fremont, Calif., and to comparison with the fourth quarter of 2009, when Toyota was restocking dealer inventories depleted by the federal government's cash-for-clunkers program.
The bottom line: Automakers continue to keep tighter inventories than they did at any time since the start of the recession. And suppliers are acting accordingly, said OESA's Andrea.
The uncertain outlook for production "is holding suppliers back in terms of hiring, capital investment and expansion," he said. The auto industry "is a microcosm of everything else you see in the economy."