Auto parts makers are getting more nervous about U.S. trade policies, a new industry survey shows.
Rising anxiety about possible changes to the North American Free Trade Agreement and concerns about political discord in Washington were the top issues among North American parts company executives in the latest Supplier Barometer, a quarterly survey by the Original Equipment Suppliers Association.
The just-released survey indicates that the concerns were more prevalent in May — after the Trump administration's first 100 days — than at the beginning of the year, said Mike Jackson, OESA's executive director of strategy and research.
"Obviously there's a lot of uncertainty about trade policy," Jackson said.
The survey is an effort to index the North American supplier community's general business mood on a scale of 1 to 100, with 100 being the most upbeat. The May survey put the industry's mood at 51 — a decline from 54 in January.
Last year during the U.S. presidential campaign, Donald Trump promised that if elected he would renegotiate the long-standing free-trade agreement among the U.S., Canada and Mexico or tear it up altogether. Now as president, Trump has stated his intention to follow through as a way to stimulate U.S. job growth.
"Trade policy is a tough one," Jackson said. "Some manufacturers and suppliers are a bit more exposed."
Executives said the uncertainty is making it difficult for them to make decisions about their global and North American manufacturing needs, Jackson said.
But he noted that the survey found that the mood varies with the size of the company.
Smaller companies were more upbeat than their larger counterparts, he said. He pinned this to smaller companies being "a little more regional, less exposed" while larger companies can have "a much broader exposure and have a bit more dynamic levels of demand and levels of production."
The new survey also found that suppliers were more stressed about skilled labor shortages in May than at the beginning of the year. The shortage of skilled workers is a constant concern among suppliers from quarter to quarter.
"Skilled labor is all the more important when we look at product launches," Jackson said.
The industry remains on a robust product launch schedule despite slowing U.S. vehicle sales, and that schedule buoyed the outlook of many suppliers in the survey.
One executive commented, "Despite indicators that the market in North America has topped, our OEM customers are still moving forward with the projects we are developing."
Jackson said suppliers are not universally hurt by reduced demand for one vehicle segment or another, such as sedans. If a supplier is on the right program, such as SUVs, the market outlook is positive, he said. "It all depends on your book of business."