This Document provides a general overview of the information

provided by the OESA Senior Vice President of Industry Analysis and

Economics during his January 14th presentation
Overview: On top of the traditional challenges of the supply industry,
suppliers face a challenging outlook for the future. In order to meet the
demands of a rapidly expanding auto-industry, poised to launch itself
into the future of high-tech automobile development and integrated
interface, while at the same time retaining a high level of quality and
concern for strictly abiding to regulatory changes, the supply industry
must continually innovate and evolve.
OESA identifies the following concerns and outlines the
sustainable solutions suppliers are already implementing in order to
meet these challenges now and in the future:
1. Problem: Meeting a Growing Demand
American NA car and Lt. Truck production forecasts
amongst 6 leading models: pwc Autofacts, IHS automotive,
LMC automotive, IRN, Wells Fargo, and Susquehanna
Financial Group, predict across the board increases
averaging 800,000 units from 2014 forecasts to 2016
forecasts.
Supply companies are already operating at an average
80% capacity utilization, with the upper quartile operating
at 86%.
According to HRI estimates and OEM interviews the tooling
industry will have to support a 34% growth in order to
meet projected 2018 demands.
Solutions:
Alternative Work schedules
Contingency Workforces
Productivity/Thru-Put Enhancements
Existing Plant and R&D Expansions
Global Footprint Re-Balance
Increasing salaries of workers
Increasing training budgets and recruiter resources
Improving pre-emptive planning for new product launches
Hiring interns
Summary: The growing demand for Automotive Equipment from
suppliers is outstripping the supply industries ability to expand.
Particularly in the acquisition of personnel in technical positions
such as Software, and Electrical engineering and in the
expansion of facilities and equipment. In order to meet these

challenges suppliers are engaged in various recruiting and

restructuring programs.
2. Problem: Uncertain Production Outlook
Between 2013 and 2014 a flush of recalls placed strain on
suppliers to rapidly increase production.
New vehicle launches lead to supply side caution because
of their unpredictable demand
According to the Automotive Supplier Sentiment Index,
which compiles the bimonthly polled outlook of 85
suppliers based on whether or not they feel their 12 month
outlook has improved, there was a positive shift in
sentiment between September 2012 and September 2013
which saw an increase or no decrease between 5 of the 6
periods and an overall 20% increase in sentiment between
the beginning and the end of the aforementioned period.
However from September 2013- September 2014 there
was a 10 percent decrease in supplier outlook, a reversal of
positive momentum.
Solutions:
Improving Production Forecasting Accuracy and
Communication
Improving Capacity Modeling and verification
Enhancing Supplier Development resources
Providing Financial Progress Payments
Developing Cost Reduction Sharing Programs
Assuring Required Technical/Engineering Support
Summary: Suppliers are cautious of capital investment in new
facilities and equipment because of increased pressure from
regulatory bodies and the restructuring of the automotive
industry.
Problem: New Regulations in Safety and Emmisions
EPA, NHTSA, and CARB, plan to issue Joint technical
assessment report by 2017, meanwhile meeting Corporate
Average Fuel Economy guidelines
New safety regulations and guideline decision are expected
to affect production in the next few years. Examples- In
2015 EV makes final ruling on Minimum sound
requirements, and Final guides for driver distraction policy
are scheduled to be issued
NHTSA to put pressure on supply industry related to their
defect investigation.
Solution:
Formation of Sub-commitees under MEMA govt. affairs
council and the regulatory affairs council

R&D focus on advanced materials, manufacturing and

product sustainability, connectivity and telematics
Stepping up managing their customers (suppliers seek to
collaborate and coordinate their efforts with
manufacturers)
Summary: Suppliers must constantly adapt to meet the new
standards set by U.S. regulatory bodies. Suppliers seek to track
the progress of these changes and to favorably influence policy.