Non-US auto suppliers now fill half of top 25 spots

Robert Sherefkin, Automotive News

Detroit, Michigan -- Virtually half of the 25 largest suppliers to automakers in North America are foreign-based, and many of the US companies on the list are struggling.

Automotive News' annual survey of the top 150 North American suppliers shows that 12 of the top 25, ranked by sales, are non-US companies, up from just five a decade ago and 11 last year.

Of the 13 US companies in the top 25, 11 had lower sales last year. Three of those 13 have received "going concern" warnings from auditors, one is in bankruptcy, and several others have corporate credit ratings deep into junk territory.

Automotive News bases its annual ranking on sales of original-equipment parts to automakers and other suppliers in North America. Suppliers provide the bulk of the financial data. Sales at some companies had to be estimated because they are closely held or because their fiscal-year results were unavailable last week.

U.S. once ruled

A decade ago, US suppliers ruled North America. Seven of the top 10 suppliers and 20 of the top 25 were based in the United States. The largest supplier then was Delphi Automotive Systems Corp., with sales of $20.64 billion.

Now Canadian supplier Magna International Inc. reigns as No. 1 for the second consecutive year, even though its sales fell 16.0 percent to $11.42 billion. Delphi Corp. is again No. 2, although its North American sales last year fell 35.8 percent to $7.59 billion.

Rising sales pushed two foreign suppliers into the top 25: Toyota Boshoku America Corp. of Japan and Benteler Automotive Corp. of Germany.

But for most large suppliers, North America was a tough market in 2008. Automakers slashed orders as vehicle sales plunged. Tight credit and high summer fuel prices also hurt.

Of the top 25 suppliers, 19 had lower sales. Eight of those were foreign companies and 11 were based in the United States.

Those with lower sales include Robert Bosch LLC, Denso International America Inc., Lear Corp., Visteon Corp. and American Axle & Manufacturing Holdings Inc.

In absolute dollars, Delphi's sales decline of $4.23 billion was the year's largest. During more than three years in Chapter 11 reorganization, Delphi's sales fell steadily as it sold assets.

The largest sales increase was Toyota Boshoku's $316 million gain, to $2.33 billion.

In percentage terms, Freescale Semi-conductor Inc. had the largest sales gain: a 64.5 percent rise to an estimated $628 million. That was enough to push it to No. 62 on the list of the top 150, from No. 118 last year.

Wescast Industries Inc. had the largest percentage drop among companies that stayed on the list. Its sales fell 54.9 percent to $142 million. That put it at No. 149, from No. 129 last year.

Overall, North American sales for the top 25 suppliers dropped 18.3 percent to $91.22 billion. Combined, the suppliers on the top 150 list posted a sales decline of 16.0 percent, to $162.20 billion.

No big deals

In previous years, the sales dollar volume was driven by mergers and acquisitions. But big deals were not a factor last year, says investment banker Michael Benson of Stout Risius Ross Advisors LLC in suburban Detroit. "As the country slipped into recession, auto parts makers were focused on how to survive the downturn," Benson says.

The past decade has been tough on U.S. suppliers. Debt-loaded balance sheets left them vulnerable to market gyrations. Then North American sales tumbled as the industry's production volumes collapsed, most notably at the Detroit 3.

Don Runkle, Delphi's former chief technology officer, says U.S. suppliers were hurt more because their Detroit 3 customers got hit by collapsing sales earlier than their rivals. Last summer, when rising gasoline prices deflated SUV sales, some Japanese makers' sales of smaller cars kept humming.

For all of 2008, new-vehicle sales by the Detroit 3 fell 23.7 percent to 6,294,437, while the overall market slid 18.0 percent to 13,247,431.

From Automotive News (A Crain publication)