The dam has broken.
North American vehicle production has grown to the point where it's no longer enough for suppliers to run an extra shift to keep up with customer demand. After years of dragging their feet, companies have no choice but to build or expand factories -- and that's precisely what they're doing.
Just like automakers, suppliers are investing big sums in brick and mortar.
"Nobody anticipated the industry would come back at the rate that it did," said Danny Infusino, Martinrea International Inc.'s head of business development and engineering. The supplier is based in Vaughan, Ontario.
In April, Martinrea began constructing a plant in Riverside, Mo., to make engine cradles for General Motors' plant in Fairfax, Kan., which is 3 miles down the road.
"There is a lot of juggling going on," Infusino said. "The plants are running six or seven days a week."
Even as demand soared in recent years, suppliers were loath to break ground on a plant or even reopen one they had spent time and money shutting down during the recession. Instead, they turned to three-shift operations and various overtime schemes, such as flex time and volunteer shift work with pay premiums, all in an effort to squeeze out volume without making big capital investments.
That was then, and this is now.
"Overtime is an issue and a problem because people are getting exhausted," says Markus Erlbacher, North American commercial manager at German bumper supplier REHAU, which is expanding a plant in Alabama to supply Mercedes-Benz.
Production of light vehicles in North America is expected to top 16.8 million units this year, according to IHS Automotive. In 2016, production is expected to rise to 17.5 million units, topping the previous record of 17.3 million units in 2000.
There has been especially strong growth of investment in North America among suppliers based in Europe and Asia, said IHS analyst Mike Wall.
"North America is a safe haven, in some ways," Wall said. "We are a mature market, but we still have growth, and we are not nearly as volatile as emerging markets."
North America is an especially attractive market at a time when the economies of the vaunted BRIC countries -- Brazil, Russia, India and China -- have become increasingly volatile and Europe's economy remains stagnant.
So foreign suppliers are expanding in North America. Some examples:
- REHAU has spent $115 million to expand its plant in Cullman, Ala., to produce bumpers for the redesigned Mercedes-Benz C-class sedan, which will be produced in Alabama for the first time.
- Austrian firm Voestalpine Group has opened a $62 million plant in Cartersville, Ga., to produce body-in-white components for Mercedes-Benz.
- Fuyao Glass Industry Group of China plans to spend $200 million to convert GM's shuttered assembly plant in Moraine, Ohio, into a glass production facility.