Figure 1
Figure 1

The latest Original Equipment Suppliers Association Barometer report shows that survey respondents are slightly less optimistic about business conditions than they were when the previous survey results were published back in May. Specifically, the OESA Automotive Supplier Barometer Sentiment Index fell from 60 in May to 55 this month. By comparison, the index hit a high of 73 in January of 2010 (see Figure 1). Note: readings above 50 reflect positive sentiments, but sub-50 numbers reflect extreme pessimism. 
Following are some additional highlights and comments from the July OESA Supplier Barometer:
  • Over the past two months, 32 percent of OEM automotive parts suppliers said they were “somewhat more optimistic” compared to 45 percent back in May. More telling, 15 percent said they were “somewhat more pessimistic” compared to 8 percent based on the previous survey. Only 3 percent said they were “significantly more optimistic.” Those respondents who described their outlook as “unchanged” voiced similar concerns. These range from...“We continue to project a slow but sustained recovery in the automotive sector” to “We believe the economy is still unsteady, and we are not taking big risks.”
  • Although North American production orders appear to be increasing, uncertainty over the European economic slowdown is causing suppliers to remain cautious. Suppliers said: “We still see great concern with the various situations in Europe from Spain, Greece, Portugal, and Ireland with respect to financial stability. Then there are concerns with the overall economy in France and Italy. Contraction in terms of plant closings are inevitable.”
  • Production planning volumes are trending upward for 2012 and 2013. The 2012 median volume is at 14 million units, up 500,000 units from the January 2012 level. Meanwhile, the 2013 median volume is 14.8 million units, up 700,000 units from January 2012.
  • Breakeven volumes are also higher than was indicated six months ago.
  • Revenue and EBIT are expected to increase for next year but at a more moderate rate than those indicated in the 2011 and 2010 Supplier Barometer summaries. Still, 97 percent of respondents anticipate revenue increases in 2013, and 92 percent indicated rising EBIT in 2013.
  • Capital expenditures continue at a steady pace for 2013. The majority of indicate capital needs are increasing for capital investments and general working capital.
  • Acquisitions. 32 percent of respondents expressed a “modest likelihood” of making a significant acquisition over the next 12 months; 8 percent expressed a “high likelihood.” For companies looking to make acquisitions, the primary strategy in doing so (with 43 percent of respondents) is to gain access to new customers through expansion into new geographic markets. As such, North America is the strongest region of interest for operations, followed by Asia, Europe, and South America.
The complete July 2012 OESA Supplier Barometer Reportis available online. The next survey will be released on Friday, Sept. 14.
The OESA Automotive Supplier Barometer is a bi-monthly survey of the top executives of OESA regular member companies. The OESA Automotive Supplier Barometer takes the pulse of the suppliers' twelve month business sentiment. In addition, it provides a snapshot of the industry commercial issues, business environment and business strategies that influence the supplier industry.