Summary
In light of the current financial meltdown of the Global Automotive Market I looked at the North American sector to identify the specific commodities of vulnerability to the OEM’s.
Analysis
To simplify the calculations of sorting through hundreds of suppliers I broke down the Top 100 suppliers by dollar sales, and then split them into categories by the commodities they manufacture. To put this in perspective the top fifteen suppliers represent 48% of the total dollars sold of the top 100 suppliers to the North American market.
When you translate that on a commodity basis, 11 of the top 15 are confined to the Chassis / Axle / Suspension & Power train components segment. Rounding out the top fifteen the remaining 4 companies are Interior Component manufacturers with 3 of the 4 being JIT Seating suppliers. So it stands to reason the OEM’s can ill afford any hiccup in these commodities to continue an uninterrupted supply of component assemblies. A noteworthy point regarding the Top Fifteen suppliers on this list; (1) Currently in bankruptcy reorganization, (1) Recently exited bankruptcy reorganization, (2) Announced suspected 2009 "going concern" audit opinions, (7) Reported losses for the 4th Qtr. 2008 and or 2008 CY.
I suspect there will be many additional factors throughout 2009 that will change the supplier landscape further especially with General Motors Suppliers. As GM unravels their European business (Opel) and the divestiture of Saab both of which were negotiated under global sourcing packages (Epsilon & Corsa/Punto) will the incumbent suppliers continue the current contracts or have the opportunity to renegotiate the terms. Either way it is additional complexity that needs to be addressed as part of the GM Restructuring Plan hopefully prior to additional government funding.
