When Superior Industries International reported a 79 percent drop in net income from last year's first quarter, the company said wheel shipments were driven down in part by "overall industry trends."
One such trend is the robust market for SUVs and trucks. For Superior, a leading North American supplier of aluminum wheels, demands for the bigger wheels that light trucks require put a strain on factories, CEO Don Stebbins told analysts during an April earnings call.
"I'd say that inside some of our facilities, we continue to struggle with some of the — let's call it the normal manufacturing cadence of some of the larger wheels, the more complex wheels and some of our equipment," Stebbins said, adding labor-related costs rose 35 percent for the company since the big-wheel boom began.
Other expenses include a 25 percent increase for energy, both natural gas and electric, as well as a 30 percent hike in maintenance and supply due to the noncapitalized repair of equipment.
Demand for big vehicles, and big wheels, is expected to keep rising. Wheel diameters exceeding 19 inches are expected to rise 188 percent from 2016 to 2021, the company forecasts.
In short, that demand represents a great profit potential for the supplier, but it is adjusting to the added strain of making them.
"We're clearly disappointed with the performance," he said during the call. "We continue to work — improve the efficiency inside each one of our facilities, and we still have a ways to go to nail that, so to speak."
Superior, of Southfield, Mich., ranks No. 79 on the Automotive News list of top 100 suppliers to North America with $733 million in parts sales to automakers in 2016.