Why the automotive supply chain faces another tough year

Since the UAW went on strike in 2019, suppliers have faced a string of financial crises. general motors In the United States, there have been major planning and financial ripples across the supply chain.

Since then, companies have seen the pandemic, soaring energy and raw material prices, labor shortages, logistical complications, factory closures in China, production disruptions at low-end parts factories, and how quickly automakers can launch new electric and electric vehicles. We’ve been dealing with market uncertainty about what to roll out. Shrink traditional internal combustion programs.

“We’re going to be in this situation for basically four years in the next fourth quarter,” Robinette said. “That respite many suppliers wanted when volumes came back — they didn’t have that kind of peace of mind. It was disaster after disaster.”

But PwC’s Carrannanto said suppliers can weather this period of uncertainty and come out stronger than when they entered in 2019. He said companies should use this year to focus on ways to improve liquidity and profitability while ensuring they are set up well for the era of electrification and connectivity in the long run. .

“Any supplier can certainly benefit if they make their portfolios and footprints more flexible and make the right moves to emerge from the recession pressures in a stronger and more profitable position,” he said. I got

He predicted that a number of mergers and acquisitions are likely to occur over the next year, especially in areas related to EVs, electronics and software. Given the financial difficulties many companies are facing, he said some worthwhile purchases may be required for companies looking to strengthen their position in these areas.

“Now is the time to rethink our portfolio and capabilities and see if we can create more value in this time frame,” said Carrannanto.

According to Robinette, the last few years have reaffirmed the importance of being agile and flexible.

“There’s a lot going on,” he said. “He’s not the only one critical issue these suppliers have to deal with at a time.”