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Automotive Suppliers Considering Their Expansion Strategy

The mood was bright for many at the Center for Automotive Research (CAR) Management Briefing Seminar in early August in Traverse City, MI. With the automotive industry set to sell more than 16 million cars this year, its recovery from rock bottom in 2009 is clear and the trajectory is set.

The mood was less upbeat for some automotive suppliers, however. While the OEMs and Tier 1 suppliers are strong,  the Tier 2 and Tier 3 suppliers who cut back during the recession in order to survive are thinking cautiously about their production and expansion strategy.

According to the OESA Automotive Supplier Barometer for July 2013, purchasing capital equipment and hiring workers are the top priorities for the suppliers, with expansion of existing facilities or opening new ones falling lower on their list.

Interestingly, several suppliers are looking to reduce the size of their manufacturing facilities and operate more efficiently. SupplierBusiness  cites the plans of Denso Manufacturing Canada as one example.

As automotive sales continue to rise, will the changes in production and expansion strategy enable suppliers to meet that demand in a timely manner?

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