US auto-imports security probe has suppliers worried

Detroit, Michigan – The US Department of Commerce's unresolved Section 232 national security investigation into automotive imports is worrying some suppliers who believe it could lead to product price increases, especially for parts and materials they must buy from other companies.

The national security probe under Section 232 of the Trade Expansion Act of 1962 centres on whether imported vehicles and parts threaten the US industry's health and ability to research and develop new, advanced technologies.

The Trump administration opened the investigation 23 May, but the Commerce Department has 270 days to offer recommendations to the president, who then has 90 days to take action.

But some suppliers fear the result will be price increases through their supply chains.

"That's one that really will crush the industry," Lear Corp. CEO Ray Scott said during a panel discussion at the Original Equipment Suppliers Association's recent annual conference in suburban Detroit.

"That's one that's significant to all of our businesses. And I hate to say it, you hope that reasonable heads prevail and understand what that would do to the supply base and to the OEs."

Scott said the price impact on his seating company's products would be limited, but it would have a "dramatic impact" on the parts coming through Lear's supply chain.

Mary Buchzeiger, CEO of Lucerne International, a supplier of automotive hinges, said the unresolved investigation and its possible results also worry her.

"We're going to lose the race if those 232 tariffs go," she told the OESA audience. "We're going to see other countries surpassing us like we're standing still."

She said she is surprised more people in the auto industry have not been making "a little more noise" about the issue. She noted that she has gone to Washington with OESA to voice her concerns.

OESA, an industry group representing 400 companies, reports that the investigation is a factor in a deteriorating business outlook among automotive companies.

The organisation's quarterly barometer, a survey of supplier industry executives that tracks the business mood and reports key areas of concern, has registered a decline in each quarter of 2018.

"Without question, the No. 1 threat has consistently been changes to government trade policy," Mike Jackson, OESA's executive director of strategy and research, said of the findings.

Brembo North America CEO Dan Sandberg said it's "crunch time" for suppliers to contact representatives and officials in Washington with their concerns about the investigation.

"We really need to be talking to the government and telling them 'You're going to kill us,'?" Sandberg said.