TRAVERSE CITY, Mich. -- Big suppliers are easing production shortfalls in better-selling regions, such as North American and China, by shipping more parts from factories on other continents.
Region-to-region shipments allow vendors to handle unforeseen production spikes without building new plants.
The tactic is particularly helpful now as automakers clamor for more parts to meet strong demand in the United States. And it provides work for plants in slumping Europe.
For example, Faurecia ships seat recliners from a French plant -- which has some unused capacity -- to supplement production from its plant in Bradford, Ontario, which is racing to keep up with demand.
"Recliners are fairly small," Mike Heneka, president of Faurecia North America, said at the 2013 CAR Management Briefing Seminars. "They have gears and cogs, and they are intricate devices. But they are easily packaged."
That plant in France allows Faurecia to avoid the need for a costly new assembly line in North America.
Mega-suppliers also ship parts from region to region to meet demand while a new assembly line is still under construction. For example, Eaton Corp. is shipping engine valves from its plant in Kearney, Neb., to China, said Staci Kroon, president of Eaton's North American automotive unit.
The shipments keep Eaton's customers in China supplied while the company builds a new production line in its Jining factory. Since it can take six to 12 months to build and validate a new assembly line, these shipments prevent production bottlenecks, Kroon said.
Without those shipments, "we'd be asking ourselves how to take three to six months out of the timetable" for expansion in Jining, Kroon said. "That would have created a lot of stress."