Trade policy uncertainty is causing pessimism across the automotive supply base, despite a strong sales and production environment, a new survey conducted by the Original Equipment Suppliers Association says.
August 20, 2018 by Canadian Plastics
Trade policy uncertainty is causing pessimism across the automotive supply base, despite a strong sales and production environment, a new survey says.
According to the latest quarterly survey conducted by the Southfield, Mich.-based Original Equipment Suppliers Association (OESA), even with low unemployment, high consumer confidence, and robust vehicle sales, the results reflect negative repercussions from the Trump administration’s current trade policy agenda.
The Q3 2018 Supplier Barometer Index (SBI) – which surveys executives among North American automotive suppliers to gauge their 12-month outlook – posts a negative reading of 43 for the quarter, seven points below the neutral level of 50.
Data was collected from June 20-29 via an invitation to an online survey; 102 survey responses were received.
The latest OESA SBI reading dropped 10 points from the Q2 2018 report, and is in sharp contrast to the positive levels of 57 and 53 in the first and second quarters of 2018, respectively.
“The threat level surrounding trade policy on a 10-point scale (1=greatest threat) has intensified, falling to 3.1 in July, down a full point from 2Q 2018,” OESA said. “Moreover, trade policy now stands out as the greatest threat to the industry by a wide margin, a full 2 points from the next greatest concern of poor sales of programs supplied at 5.1.”
According to OESA, concerns also remain over supply-chain risks, commodity prices, and the outcome of the ongoing NAFTA negotiations.
“Policy uncertainty serves to constrain additional capacity investment and accelerate volatility through the supply chain, adding risk down the tiers,” said Mike Jackson, OESA’s executive director of strategy and research and author of the study. “Now, more than ever, suppliers should strive to use the increasing market turbulence to their advantage by assessing and prioritizing alternative scenarios beyond the near-term to realize their strategy for success.”
To see the full survey results, click on this link.