OESA News 2017 First Quarter, Edition 2

NEWS

Original Equipment Suppliers Association

2017 First Quarter │ Edition 2

Don't miss the GM Purchasing/Supply Chain Town Hall Feb. 17th.

Photo by Greg Sadler

IN THIS ISSUE...

3

The Suppliers' Voice

4

Upcoming Events

6

Guest Column: Leading Through Uncertainty

7

Calendar of Events

VEHICLE PARTS:

THE LARGEST U.S. SECTOR OF MANUFACTURING JOBS 871,831 TOTAL U.S. DIRECT EMPLOYMENT

SOUTHWEST

WEST

MIDWEST

NORTHEAST

SOUTHEAST

6%

5%

5%

6%

51%

49%

7%

8%

30%

32%

2012

2015

2012

2015

2012

2015

2012

2015

2012

2015

871,831 TOTAL U.S. DIRECT EMPLOYMENT MICHIGAN 125,909

TEXAS 33,132

ARKANSAS 10,495

WASHINGTON 4,687

NORTH DAKOTA 1,994

DELAWARE 400

OHIO 96,238

CALIFORNIA 31,190

MISSISSIPPI 9,706

ARIZONA 4,672

RHODE ISLAND 1,879

MONTANA 269

INDIANA 88,306

PENNSYLVANIA 27,920

FLORIDA 8,827

OREGON 4,473

MARYLAND 1,720

WYOMING 136

TENNESSEE 50,128

GEORGIA 23,836

OKLAHOMA 8,676

WEST VIRGINA 4,069

NEW HAMPSHIRE 1,389

ALASKA 30

KENTUCKY 47,658

NEW YORK 19,517

NEBRASKA 8,415

NEW JERSEY 4,028

VERMONT 745

HAWAII 21

ALABAMA 41,107

WISCONSIN 18,200

UTAH 7,884

SOUTH DAKOTA 3,931

IDAHO 616

WASHINGTON D.C. 2

ILLINOIS 38,394

MISSOURI 16,301

MINNESOTA 6,366

LOUISIANA 3,167

MAINE 549

NORTH CAROLINA 33,825

IOWA 16,114

KANSAS 6,270

COLORADO 3,120

NEW MEXICO 525

SOUTH CAROLINA 33,766

VIRGINIA 13,277

CONNECTICUT 4,958

MASSACHUSETTS 2,510

NEVADA 484

DRIVING THE FUTURE | 11

Source: IHS Markit MEMA e-version Publication can be view here: THE EMPLOYMENT AND ECONOMIC IMPACT OF THE VEHICLE SUPPLIER INDUSTRY IN THE U.S.

2 │ OESA News - 2017 First Quarter

Voice

The Suppliers’

Julie A. Fream

President and CEO

OESA and our parent company, MEMA, recently released the results of our 2016 Economic Impact Study on the mobility industry. The study shows that since 2012, OE suppliers have seen a 23.3 percent growth in employment, representing 523,000 direct jobs in the U.S. These numbers demonstrate that automotive suppliers are directly driving economic growth in the U.S. On a broader scale, U.S. automotive parts manufacturing jobs (which includes the entire mobility industry: original equipment, aftermarket, heavy duty, light duty, offhighway; commercial vehicle sectors and others) have risen nearly 19 percent since 2012. Altogether, the U.S automotive parts manufacturing industry directly employs more than 871,000 people, up from 734,000 in 2012. Together with indirect and employment-induced jobs, the total U.S. employment impact of the motor vehicle parts manufacturing industry is 4.26 million jobs, up from 3.26 million in 2012. This represents 2.9 percent of the jobs in the total U.S. employment market and 2.4 percent of the U.S. gross domestic product (GDP).

With advances in technology and the impact of potential changes in policy and trade, the automotive industry is on the cusp of the biggest change in more than 100 years.

OESA is prepared for the future with solid data, such as the results of the impact study, to promote your interests and ensure the voice of automotive suppliers is clearly articulated and heard during the coming months and years.

As always, please feel free to contact me at 248.430.5963 or jfream@oesa.org.

Click here for the full report, including stateby-state employment numbers, is available here. The study and methodology was conducted by IHS Markit.

DRIVING THE FUTURE

THE EMPLOYMENT AND ECONOMIC IMPACT OF THE VEHICLE SUPPLIER INDUSTRY IN THE U.S.

mema.org DRIVING THE FUTURE | 1

OESA News - 2017 First Quarter

│3

OESA EVENTS 2016-17 OESA Board of Directors Chairman of the Board Mike Mansuetti* President Robert Bosch LLC Immediate Past Chair Samir Salman* CEO NA Region Continental Automotive Systems, Inc. Vice Chairman Michael E. Martini* President Consumer OE Bridgestone Americas Vice Chairman Ramzi Hermiz* President and CEO Shiloh Industries Officer Julie A. Fream* President and CEO Original Equipment Suppliers Association Officer Steve Handschuh* President and CEO Motor & Equipment Manufacturers Association *Executive Committee

OESA MOBILITY SUPPLIER FORUM FEB. 14 OESA is pleased to announce the formation of a “Mobility Supplier Forum,” intended to help automotive suppliers on the West Coast to advance their business interests in connected and transformative technologies. This new automotive forum will meet quarterly in 2017 in California’s “Silicon Valley” area. Each meeting will feature a half day of OEM presentations and updates, as well as insights from industry leading experts on issues of common concern for automotive suppliers.

The first meeting will be held on Feb. 14, 2017, at Flex Automotive’s Silicon Valley Customer Innovation Center in Milpitas, Calif. Executives from the Ford Research and Development Center will discuss their current and future products and their needs from suppliers. Eric Hoarau, senior director of technology & business development, Flex Automotive, will discuss Flex’s capabilities and offer a tour of the campus. Brian Daugherty, chief technology officer, MEMA, will share his perspective on technology issues facing the automotiveindustry and MEMA’s role in addressing them in the legislative environment. ► SUPPORTING PARTNER

Directors Oscar Albin Executive President INA, Industria Nacional de Autopartes A.C. Paul Barnett President Principal Manufacturing James Bradbury President Grand Rapids Controls Company LLC Françoise Colpron Group President Valeo North America Frederick Cartwright Executive Director Clemson University International Center for Automotive Research (CU-ICAR) David C. Dauch Chairman and CEO American Axle & Manufacturing, Inc. (AAM) (Continued on page 5)

4 │ OESA News - 2017 First Quarter

OESA MEMBERS-ONLY GM PURCHASING/SUPPLY CHAIN TOWN HALL | FEB. 17 Steve Kiefer, senior vice president, global purchasing and supply chain, General Motors Company, and members of his Global Purchasing & Supply Chain (GPSC) senior leadership team will host the GM Purchasing/Supply Chain Town Hall on Feb. 17, 2017, at the General Motors Design Dome in Warren, Mich.

The meeting offers OESA members a unique opportunity to learn about the latest GM supplier initiatives, participate in an open question-and-answer session, and take advantage of One-on-one networking opportunities with GM executives following the formal meeting. This meeting is open to OESA supplier members only.

OESA EVENTS Kiefer’s leadership experience in the supplier community has proven to be a strong asset to the OEM-to-supplier relations as GM continues to reshape how the company and suppliers work together to deliver greater value to end customers. ► SUPPORTING PARTNERS

2016-17 OESA Directors (Continued from page 4) Jacqui Dedo Co-Founder Aware Mobility, llc Paul Doyle CEO Coastal Automotive John Dunn President and CEO, The Americas, Plastic Omnium Auto Inergy Division Douglas J. Grimm President and COO MPG

Please note: There will be shuttle buses from the parking deck to the Design Dome.

Shuttles will run from 7-9:15 a.m. and 10:30 to 1:30 p.m.

Please plan accordingly.

29TH ANNUAL CANADA/U.S. AUTOMOTIVE DINNER | MAR. 6 The 29th annual Canada/U.S. Automotive Dinner will be held on March 6, 2017, at The Henry Ford Museum of American Innovation in Dearborn, Mich.

This event is organized in cooperation with OESA, the Automotive Parts Manufacturing Association (APMA), and the Consul General of Canada, Detroit. It is meant to foster greater collaboration between the U.S. and Canadian automotive supplier industries.

Hau Thai-Tang, group vice president, global purchasing, Ford Motor Company, will deliver this year’s keynote address on the future of the automotive industry and Ford's role as a mobility company.

Michael Haughey President North American Stamping Group, LLC Ken Hopkins President and CEO Neapco Holdings, LLC Don Manvel Chairman AVL Americas Chris Obey President, Automotive Flex Lon Offenbacher President and CEO Inteva Products Michael Rayhill President Jiffy-Tite Company, Inc. Michael Robinet Managing Director Automotive Advisory Services IHS Markit Dan Sceli President and CEO Peterson American Corporation Wes Smith President and CEO E & E Manufacturing Co., Inc. Armando Tamez CEO Nemak Jim Teets President and CEO ADAC Automotive

For all events, register in the events section of www.oesa.org. For additional information, contact OESA at 248.952.6401 or info@oesa.org.

James Verrier President and CEO BorgWarner Inc.

OESA News - 2017 First Quarter

│5

GUEST COLUMN

LEADING THROUGH UNCERTAINTY Xavier Mosquet Senior Partner & Managing Director | BCG Detroit Mosquet.Xavier@BCG.com | 248-688-3456

The automotive industry is at a transition point in many ways and faces significant uncertainty. Although this is not the first time the industry has had to deal with major changes, the fogginess of the future may be more wide-ranging and intense than ever. From our conversations with suppliers and OEMs, we identified four main areas of uncertainty: talent, regulation, market, and technology. It is vital that the industry grasp the key dimensions of today’s uncertainty and understand how to manage through them.

Talent Talent and capabilities are top of mind. As the content of cars evolves toward 65% electronics and software, and as digital processes promise significant productivity gains by leveraging the power of data and analytics, organizations must define and build new roles and capabilities. In addition, the importance of maintaining quality and the need to manage ambiguity place new demands on the development of leaders and management.

Regulation With the new administration coming into office, uncertainty around regulation has increased. New trade policy proposals; and changes in CAFE requirements, ZEV mandates, and EV credits are issues the industry must consider in terms of global competitiveness and supply chain investments.

Market The market’s evolution toward car sharing brings into question conventional views regarding the volume and nature of vehicles sold in this segment, and the demographic characteristics of future customers. The share of the overall market that this segment will command and whether it will weaken or boost demand for cars overall remain to be seen, although we view the total number of miles driven as a bigger market driver than whether cars are owned or shared. Furthermore, increased regulations for emissions controls and occupant safety, and consumer demand for infotainment and connectivity, drive costs and prices up for the end-user. Mitigating these cost increases is a key challenge for OEMs and suppliers alike.

Technology Meanwhile, technology is poised for disruption. Autonomous vehicles hold out the prospect of safer cars, cheap ridesharing for all, and increased convenience. But this technological advance creates an incentive for many new players, tech companies, mobility players, and start-ups, all of which will compete with incumbent suppliers and OEMs for speed of development, reliability,,cybersecurity, 6 │ OESA News - 2017 First Quarter

and—critically important—cost effectiveness. As matters stand today, many players look as though they might win this race, but not all will. The result is uncertainty over which path to follow, who to partner with, and how much to spend. In addition, the way that ethics questions and social acceptance will be addressed is still to be defined and will impact the speed of market development.

Managing through uncertainty As uncertainty grows within the industry, preparation becomes more and more crucial. We have identified a few best practices for managing through uncertainty: • Foster a managerial mindset.

• Develop ecosystems and partnerships.

• Deepen your understanding of consumer preferences and economics.

Fostering a managerial mindset begins with training managers to be more comfortable with ambiguity and to make decisions that can accommodate changes in the business context. Such training may involve scenario planning and encouragement of bold and ambitious organizational thinking. Scenario planning helps uncover areas of strategic uncertainty, permits planning in various environments, and can help managers embrace the opportunities that accompany uncertainty rather than be paralyzed by the unknown.

Given current trends in regulation and technology, forming partnerships and creating a sustainable ecosystem are essential. In a sustainable ecosystem, management can explore several paths while reducing risk, and can ready itself to respond quickly and effectively when business models, customer choices, and disruptive players and technologies evolve in unexpected ways.

When the number of options in the market increases, a deep understanding of the end user, driven by consumer preferences and the evolution of relevant economics can be a lighthouse guiding you to make the right decisions. There is no substitute for having your own understanding of the market. As an example, the share of EVs increased in 2016 in the US, while the share of hybrids continued to decline.

In the face of uncertainty, taking multiple steps to prepare your company for the unknown is vital. And with uncertainty come great unexpected opportunities.

OESA EVENTS

CALENDAR OF EVENTS UPCOMING EVENTS Feb.

14

Feb.

17

Mar.

06

OESA Mobility Supplier Forum Flex Automotive Milpitas, Calif.

OESA Members-Only GM Town Hall General Motors Design Dome Warren, Michigan

Sept.

SAVE THE DATE FCA Town Hall

Dec.

SAVE THE DATE Ford Town Hall

12

01

29th Annual Canada/U.S. Automotive Dinner The Henry Ford Museum of American Innovation Dearborn, MI

UPCOMING OESA COUNCIL MEETINGS* Feb.

09

Feb.

16

Feb.

23

Environment, Health and Safety Council OESA Conference Center Southfield, MI Product and Technology Development Council OESA Conference Center Southfield, MI

Mar.

Chief Information Officers Council OESA Conference Center Southfield, MI

Mar.

Tooling Council OESA Conference Center Southfield, MI

07 08

OESA Sales Executives Council Somerset Inn Troy, MI

*Open to peer group council members & invited guests.

For more information and to register for events and council meetings, visit oesa.org, or call OESA at 248.952.6401.

OESA News - 2017 First Quarter

│7

Original Equipment Suppliers Association Check out our online publication at www.oesa.org/news

25925 Telegraph Rd., Ste. 350 │Southfield, MI 48033-2553 248.952.6401 │oesa.org │info@oesa.org Connect with us on

OESA News is provided by the OESA Communications Team.

April Buford Director, Communications

Jeff Laskowski Manager, Communications

Alia Bazzi Website and Graphic Designer

248.430.5964 abuford@oesa.org

248.430.5950 jlaskowski@oesa.org

248.430.5958 abazzi@oesa.org