Global platforms could shake up suppliers

By Robert Sherefkin, Automotive News

Detroit, Michigan -- A new shakeout of the North American supply base could be under way as automakers focus on global vehicle platforms, an industry consultant says.

The race to compete in this industry dictates global platforms, says James Ricci. That creates opportunities for the best-positioned suppliers -- but undermines ones that aren't global.

"Suppliers have a significant opportunity to grow with this conversion to global platforms," said Ricci, a director with the consulting firm Grant Thornton in suburban Detroit. "We will see acquisitions, mergers and alliances form, centering on geographical, technological and customer-related issues."

Global platforms reduce engineering costs and give automakers flexibility to react to the market. They also simplify manufacturing processes and improve quality by reducing variability.

Ricci told Automotive News that the shift to global platforms does not mean the quick collapse of 500 or more companies. Many will move from Tier 1 to Tier 2. Others will put themselves up for sale, Ricci said.

A need still exists for large regional suppliers, but they are a shrinking part of the market, he said.

Last year, as many as 200 suppliers went out of business, Ricci said. As many as 50 other parts makers filed for bankruptcy.

Ricci declined to list potential winners in the coming shift. But he did point out the moves by International Automotive Components Group, which this month announced plans to buy the portion it did not own of flooring and acoustics supplier Stankiewicz International Corp. The deal, which gives IAC a flooring operation in both Europe and North America, will position the supplier for global platforms.

Ricci also cited Johnson Controls Inc. and Lear Corp. as being well-positioned with global seating businesses.

Suppliers, he said, must act fast because 2010 is a critical year. By this time next year, the majority of General Motors Co. and Ford Motor Co. programs for 2013 and 2014 already will be sourced, he said.

Ricci said nine of the 10 highest-volume platforms in 2014 will be tied to just four automakers. Ford's percentage of global platforms could rise to 64 percent of its total platforms.

Ricci said GM will be the most aggressive in reducing the number of North American platforms. He said that number could fall from 18 today to 11 in 2014.

Leslie J. Allen contributed to this report

From Automotive News (A Crain publication)

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