Are Auto Makers Pressuring OE Suppliers to Shift Production Abroad ?

DETROIT, Feb. 12, 2004 -- Pressure to move automotive manufacturing jobs abroad will continue, despite federal and local government efforts to maintain or increase industry employment levels in the U.S., according to a report planned for release at the 2004 SAE (Society of Automotive Engineers) World Congress next month in Detroit.

The Odyssey of the Auto Supplier Industry, a study conducted by Roland Berger Strategy Consultants in cooperation with the Original Equipment Suppliers Association (OESA), will be the focus of a half-day seminar beginning at 8:30 a.m. in Cobo Center's Riverfront Ballroom on Monday, March 8.

A leading consultant to the auto industry, Roland Berger outlines global success strategies for automotive suppliers in the study, which includes the results of online surveys and extensive interviews with top management of OESA members.

"Nearly every supplier we've interviewed so far has indicated they are under increasing pressure to expand production outside North America," notes Wim van Acker, managing partner of Roland Berger's U.S. operations. "This trend illustrates a critical need for suppliers, especially small and medium- sized companies, to develop a new set of manufacturing strategies."

Dennis Cuneo, senior vice president, Toyota Motor Manufacturing North America, will be the keynote speaker at the March 8 SAE program. He will be joined in a discussion of the report by a panel that includes Timothy Jackson, senior vice president of Global Technology for Tenneco Automotive, and Hans Jehle, president of Mahle North America.

The forward-looking study, which is still under development, will outline "best practices" for global automotive suppliers. Van Acker explains that globalization of the supplier industry has evolved from multinational companies with regional operating groups, to strategic enterprises bidding on global platforms.

"Large suppliers are well aware of the pressing need to act, and they are actively pursuing opportunities abroad," the Roland Berger executive says. "A preliminary finding of the Odyssey supplier report is that small and medium- sized suppliers will be impacted the most by these emerging changes. They will have to decide whether to move with their customers.

"But if they do move with their customers, how will they avoid the pitfalls that may derail their efforts to expand in emerging markets? In many cases, these companies do not have the financial and human resources to support global expansion. Nor can they afford even one failure."

The Roland Berger study will discuss trends in the global automotive supply chain; specific automotive component groups; which regions may win or lose, and what actually is driving the migration of automotive manufacturing jobs to locations outside of North America.

The Odyssey study seeks to help suppliers understand how their global manufacturing operations will need to change and how best to make those changes to survive and thrive. In addition, the Roland Berger report will list tools, techniques and equations to evaluate where a supplier should be outsourcing or positioning its global resources.

Roland Berger is a leading strategy consulting firm with more than 1,700 consultants working from 34 offices in 24 countries across Europe, Asia and the Americas. The company's global Automotive Competence Center of 120 professionals has completed more than 700 projects during the last decade.

OESA is a forum for more than 350 automotive suppliers with global sales of more than $300 billion annually. Members include automotive suppliers of components, modules, systems, material and equipment.