North American suppliers of original vehicle equipment for the automotive industry are struggling to keep up with increased production this year, according to a survey conducted by the Original Equipment Suppliers Association. The survey indicates that 62 percent of suppliers to North American automotive makers have been forced to extend the working hours of their employees to keep up with growing demands for making new vehicles.
Part of the increase in production lies in the increased demand for light vehicles. This year, production of these vehicles is expected to grow to 15.9 million, up from just 12 million in the year 2010. Additionally, auto makers are launching 43 new car models for the year 2014, more than double the 20 million introduced for the 2013 model year.
During the height of the recession, a number of suppliers were forced into bankruptcy. The remaining suppliers had to cut back severely on their production capacity in order to cut costs and remain afloat. Hence, as the auto makers increase their production as the economy begins to recover, there simply aren’t enough suppliers out there still able to produce the large quantities of supplies needed to make the vehicles.
Bob Young, the purchasing chief for Toyota of North America, told the publication Automotive News that they were keeping a watch list of 40 of their suppliers which are struggling to meet demands. This is twice the number of suppliers on the watch list last year.
Tom Lake, Honda’s purchasing chief, said the company is watching 12 of its suppliers closely. While this is not good news for the auto makers, it is positive news for the economy as a whole. Consumers are now willing and able to purchase new cars, something that was not happening during the worst of the recent economic recession.
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