Melissa Anderson: Automotive industry and manufacturing
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Automotive industry and manufacturing
Melissa Anderson
Vice President, IRN Inc.
IRN’s forecast for the automotive industry in 2012 calls for a 7-percent increase in North American vehicle production, equating to almost one million additional units. Think about the multiplier effects of that increase, given that there are 8,000 to 12,000 components per vehicle, and suppliers to the automakers create about 60 percent of the vehicle value.
Rising demand for cars and trucks pulls business through suppliers of basic materials like steel, plastic, rubber and glass. It engages metal stampers, injection molders and providers of secondary services such as heat treating and e-coating. They might need more equipment to produce greater volumes, which is good news for builders of production machinery and equipment. Professional and technical services make sure that everything is in working order, commercially and mechanically. Transportation and logistics providers get everything to the right place at the right time.
Our region is well-positioned to benefit broadly from the continuing recuperation of the auto industry. We may not have an automaker presence here any longer — although not for lack of trying — but virtually every other element of the supply chain described above can be found within our regional economy. Revenues for automotive-related companies should be higher in 2012, and that is true whether you are Johnson Controls with 3,200 employees in West Michigan or prototype shop Active Manufacturing in Spring Lake with 1 percent of that.
The big picture looks good, but here is our concern for 2012: In IRN’s just-completed annual supplier survey, almost 40 percent of the respondents said that the new jobs they have taken on are either “significantly less” or “somewhat less” profitable than their current book of business. Being busy is not helpful if it does not yield the profits that a company needs to prosper. We predict that 2012 will be a year in which West Michigan businesses are challenged to hold onto the lean, efficient profiles they developed during the recession, as consumer demand strengthens and product pipelines are re-filled.