TRAVERSE CITY, Mich. -- Stretched suppliers will rely on factory automation, creative logistics and, if necessary, plant expansions to keep pace with surging North American auto production.
Assembly plants in North America are expected to make more than 17.2 million vehicles in 2016, a record. Annual production will continue to grow until 2020, when it reaches at least 18 million units, economists predicted this month at the CAR Management Briefing Seminars here.
North American plants assembled 15.5 million units in 2012, according to the Automotive News Data Center, up 18 percent from 13.2 million in 2011.
Some Tier 1 suppliers, such as Continental Automotive Systems U.S., are adding plants, buying more efficient equipment and importing parts from Europe to keep up.
In July, the supplier announced a $35 million expansion of a plant in Henderson, N.C., that produces electronic integrated parking brakes. In January, the company announced a $129 million investment in a tire plant in Mount Vernon, Ill., to boost production.
"We look at capacity long in advance. We always have a five-year plan to look at what production is going to do, and we adjust our capacity to what we think is happening in the marketplace," said Samir Salman, CEO of the NAFTA region for Continental.
Meanwhile, on separate earnings calls last month, executives at Ford Motor Co. and Chrysler Group said they are trying to help suppliers meet demand for parts. This month, Chrysler Group, Honda Motor Co. and General Motors announced plant expansions in North America.
Tony Schultz, vice president of the Americas for Honeywell Turbo Technologies, said the company would use excess capacity in its Mexicali, Mexico, plant to meet growing demand for turbochargers.
He predicted market penetration for turbochargers will increase from 16 percent now to almost 25 percent by 2018, which represents an additional 1.6 million units.
"Capacity is an issue," Schultz said.