The OESA Automotive Supplier Sentiment Index changed marginally in July. Overall, the value dropped slightly to 60 from a level of 62 in May. Since “somewhat more optimistic” and “unchanged” sentiments stayed in the mid- to high-40 percent range, suppliers seem to be feeling more confident about their positions in automotive and the economy.
Additionally, suppliers are evaluating capital equipment purchases and hiring direct hourly and salary as well as temporary/contract employees to manage increasing production volumes, according to the bi-monthly survey. Year-over-year capital expenditure increases are being planned by 63 percent of suppliers.
Other findings from the July survey include:
- Suppliers are focusing their 2014 capital needs on capital investment and general working capital. Capital investments are relatively unchanged from July 2012 with general working capital budgets remaining tight.
- Interest in M&A is increasing in 41 percent of responding companies, up from 31 percent in the 2012 survey. Some of this interest is a matter of timing as 46 percent of responding companies expect that commercial loan interest rates will tighten somewhat over the next 12 months and 25 percent expect some tightening in cost of credit lines.
- Balancing income and expenses are keys for suppliers in 2014. Eighty-eight percent of suppliers expect growth in revenue and 80 percent indicate EBIT growth for 2014. However, anticipated year-over-year incremental growth is expected to slow down for both measures in 2014.
- Acquisitions are a consideration for most supplier companies with 10 percent indicating a high likelihood of an acquisition and 48 percent indicating a moderate probability in 2014. For those considering acquisitions, the regions of focus are North America, Europe and Asia as companies look to grow market share, access new customers or follow existing customers into geographic markets, and accelerate access to new technologies.
- Sixty-nine percent of respondents expect to increase salary employment and 81 percent plan to increase hourly employment. Though still strong, both of these numbers are down from last year.
A full copy of the July OESA Automotive Supplier Barometer survey results and the Sentiment Index chart (jpeg) are available on the OESA website at http://www.oesa.org/Knowledge-Center/Automotive-Supplier-Barometer.
About the OESA Automotive Supplier Barometer
The OESA Automotive Supplier Barometer takes the pulse of OESA regular members and provides a snapshot of the business environment, commercial issues and supplier strategies. OESA appreciates the support of Deloitte LLP with OESA Automotive Supplier Barometer. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see http://www.deloitte.com/us/about for a detailed description.
About OESA
Formed in August 1998, OESA provides a forum for automotive suppliers by addressing issues of common concern through peer group councils, serving as a reliable source of information and analysis, providing an industry voice on issues of interest and serving as a positive change agent to the automotive industry. With nearly 400 members having global automotive sales exceeding $300 billion, OESA represents more than 70 percent of North American automotive supplier sales. For more information, visit http://www.oesa.org. OESA is an affiliate of the Motor & Equipment Manufacturers Association.
