Surveys of suppliers find hefty profits, rosy outlook

ERJ staff report (AN)

Detroit, Michigan -- A pair of new surveys suggest auto suppliers are enjoying their healthiest profit margins in years -- and expect to be busier in 2011.

Nearly two-thirds of suppliers expect 2010 revenue to finish at least 20 percent higher than last year, according to a global survey of 220 supplier executives by consulting firm A.T. Kearney and research firm SupplierBusiness, a unit of IHS Global Insight.

What's more, 82 percent of those polled in the August survey said they expected orders to climb over the next 12 months. Suppliers from North America, Europe and Asia responded to the poll; 55 percent were Tier 1 suppliers.

More than half the respondents expected bankruptcies among suppliers to drop over the next year. And suppliers perceive automakers as healthier, too: 26 percent said they expect at least one of their vehicle-maker customers to fail in the next two to three years, down from 42 percent who felt that way in April.

Another survey, by Roland Berger Strategy Consultants in suburban Detroit, concluded that suppliers' profit margins, before interest and taxes, will be a robust 6 percent this year.

That survey, conducted in September, credits booming auto markets in China, Brazil and India, along with a "partial recovery" in North America, Europe and Asia.

From Automotive News (A Crain publication)