Challenging Times for North American Manufacturing Suppliers

Commentary by Doug Donahue

As new car sales volumes increase in North America, there is growing pressure on providers across the supply chain to keep up with demand. Industry analyst IHS Automotive predicts that new car sales in the US are expected to top 15 million in 2013, with production across North America to surpass 16 million in 2013 and 17 million in 2015, as reported at SupplierBusiness.com, an IHS Automotive practice.

According to IHS Automotive: “Ford purchasing is meeting with its suppliers on a weekly basis to discuss demand and is adding shifts at plants, increasing capacity by 400,000 vehicles last year and preparing to add another 200,000 this year to meet demand. As production forecasts for the next few years increase, there is concern about whether this demand can be met.”

Ford’s situation is not unique, as the number of global vehicle launches is expected to grow by a third or more in the next five years. This puts a lot of strain on suppliers to keep up, though many are already running crews in three shifts and are near maximum capacity.

The Mexican Manufacturing Option

What this article leaves unsaid is that many automotive suppliers are turning to central Mexico in order to expand capacity and handle this surge in demand. Tier One, Tier Two and Tier Three suppliers are all seeing the benefits of manufacturing in central Mexico, particularly as the automotive sector has clustered around areas like Guanajuato, Leon, Queretaro, Toluca and Puebla.

Furthermore, the big manufacturers are demanding – not requesting – that suppliers who want to do business with them have a nearby, low-cost Mexican manufacturing presence, in order to benefit from just-in-time methods and keep an eye on production and quality.

Source: SupplierBusiness.com

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