Plastics Suppliers Fire Up the Auto Industry (Interview with OESA)

Global Corporate Xpansion (8/20, Duran) – Dave Andrea, the vice president of industry analysis and economics for the Original Equipment Suppliers Association in Troy, Mich., discussed the state of the auto supplier industry, with an emphasis on plastics-related automotive suppliers.

GCX: Dave, what is one of the biggest challenges to the automotive supplier sector today?

Andrea: For the traditional auto supplier, the biggest pressure is on volumes because of how capital-intensive plastics injection molding and stamping activities are. They still have a tremendous amount of fixed costs. Another key issue is the way the auto industry pays suppliers for tooling and R&D…There is a significant cash flow disparity from when the suppliers develop the tools and when they get paid for them.

GCX: So, this is a result of the automotive OEMs tasking the suppliers to take more of the design work in-house and develop more innovations?



Andrea: The auto industry spends about $16 billion a year on total R&D. The supplier portion of this is 30 percent to 35 percent. So, as we look at the future, we know there are significant requirements for fuel-efficiency standards, safety standards and emissions standards. Many of the key components are in the power train area, certainly in light-weight vehicles. That technology and innovation will be developed in the supply base. That is why we need a strong and viable supply base to in order to develop these vehicles and to have a competitive industry in North America.

GCX: What are some of the innovations that will be developed?

Andrea: As we [lighten vehicle weight,] we are also looking at the recyclability of the vehicles. Ninety percent of a vehicle can be recycled and reused. As we increase the plastics content we do have to keep in mind the recycling or disassembly side of the business. We have to keep the plastics streams as simple as possible in terms of the compounds used in order to ease the recyclability of the product.