Many Michigan Auto Suppliers Not Equipped for E-Commerce

Center for Automotive Research Study Shows Major Changes Needed If Key Business Sector is to Prosper

LANSING, Mich., Dec. 20 -- The Michigan Economic Development Corporation today cited a study by the Center for Automotive Research as further evidence that a lack of high-speed telecommunications access is becoming a major hurdle to Michigan's important automotive supply industry. "It is clear from this study that companies lacking high-speed telecommunications access are going to be at an increasingly significant competitive disadvantage," said Doug Rothwell, president and CEO of the Michigan Economic Development Corporation. "The industry is dictating that automotive suppliers make significant strides in their e-commerce capabilities or face the threat of lost business to other companies that are more technologically capable." The study, "E-readiness of the Automotive Supply Chain," surveyed a sample of Tier 1 automotive suppliers with the highest North American sales figures. The average respondent had 2000 automotive sales of $4.4 billion, and a supply chain consisting of 1,303 individual suppliers. The study revealed that Tier 1 suppliers are investing heavily in e-commerce, and are expecting a significant return on those investments. These major suppliers are demanding that lower-tier suppliers keep up with technological advances that will allow them to check parts availability, observe production schedules, send and receive orders, provide engineering documents and other functions -- all electronically. Unfortunately, many of Michigan's lower-level suppliers are willing but unable to meet such demands. "We would like to take advantage of real time design and collaboration with the automotive companies and Tier 1 suppliers, but without broadband it is not possible," said Matt Lennon, systems administrator for Rolleigh, Inc. and Roll Tech, Inc. The Michigan Company builds molds and machines servicing the automotive industry. The study reveals that within two years approximately 60-70 percent of all automotive suppliers will be required to interact and conduct broadband- dependent e-commerce activities, as opposed to only 15-20 percent today. "The growing mandate on auto suppliers is alarming in light of the condition of our state's telecommunications infrastructure," said Rothwell. "With recent announcements of broadband investment cutbacks in Michigan, the ability of broadband supply to meet business demands is a serious concern." According to Rothwell, the MEDC has heard from hundreds of Michigan companies in similar situations. The inability of many businesses to get high-speed telecommunications access led the MEDC to publish its LinkMichigan study in May, with proposals for achieving a comprehensive broadband solution in the state. "The production of automobiles is becoming increasingly high-tech, and that shift is making itself evident all the way down the supplier chain," said Dr. David Cole, president of the Center for Automotive Research. "Lower-tier suppliers who are unwilling or unable to meet the demands of electronic commerce are going to find it very difficult to survive in this new business climate." The report can be viewed in its entirety at http://www.erim.org/car/e-readiness.html . The MEDC is a partnership between the state and local communities, promotes smart economic growth by developing strategies and providing services to create and retain good jobs and a high quality of life. For more information about the LinkMichigan initiative, visit the Michigan Economic Development Corporation website at http://www.michigan.org .