OESA News 2017 Third Quarter, Edition 1

NEWS

Original Equipment Suppliers Association

2017 Third Quarter │ Edition 1

IN THIS ISSUE...

3 4

The Suppliers' Voice 2Q OESA Supplier Barometer

6 8

OESA Events 2017 OESA Annual Conference

This edition is sponsored by

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Calendar of Events

Voice

The Suppliers’

Julie A. Fream

President and CEO

Representing the interests of automotive suppliers, MEMA opposes steel and aluminum import policy changes

With the input of OESA supplier members, our advocacy team in Washington, D.C. (MEMA) submitted comments to the U.S. Department of Commerce on the proposed policy changes to the steel and aluminum import rules. MEMA’s comments are in response to the Commerce Department’s national security investigations.

MEMA warned that policy changes preventing or encumbering motor vehicle parts suppliers’ ability to obtain certain types of steel or aluminum could jeopardize production of critical products made for the U.S. defense industry and destabilize the U.S. manufacturing job base.

The U.S. automotive industry is closely related to the U.S. defense industry. Many of our member companies provide components for vehicles used by the defense industry, including technologies that have resulted in safer, more effective vehicles for defense. We strongly urged the government not to make any adjustments to steel and aluminum imports.

“We strongly urged the government not to make any adjustments to steel and aluminum imports.”

MEMA commented that changes to import rules could increase costs and make certain forms of steel and aluminum manufactured only outside of the U.S. difficult to obtain.

Proposed “adjustments” could also include quotas, tariffs, taxes, or other policies impacting steel imports that could hamper U.S. manufacturers. In addition, OESA urged the administration to exclude Canada from any aluminum investigation.

Most importantly, changing import rules would hurt the largest sector of manufacturing jobs in the U.S., putting American jobs at risk. Vehicle suppliers directly employ more than 871,000 Americans. Combined with indirect jobs, the total employment impact of the motor vehicle parts manufacturing industry is 4.26 million jobs. Nearly $435 billion in economic contribution to the U.S. GDP is generated by the motor vehicle parts manufacturers and its supported activity. In total, motor vehicle parts suppliers contribute more than 77 percent of the value in today’s vehicles.

There is anticipated job growth in our industry for engineers, technicians and skilled trades.

Therefore, we expect the industry to continue to contribute heavily to the country’s economic growth. However, this growth assumes no adjustments to steel or aluminum imports. Changes to import rules could jeopardize many of these jobs, as well as job growth.

I’ll continue to keep members informed of proposed changes in policy, trade and taxes that could have a direct impact on the supplier industry.

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

Click here to view the complete comments to the U.S. Department of Commerce.

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SUPPLIER BAROMETER

BAROMETER STAYS POSITIVE, Yet Policy Uncertainty Weighs on Suppliers OESA Supplier Barometer Index (SBI):

North American supplier business outlook, as tracked by the OESA Barometer (ranked on a 100-point scale) Source: OESA Barometer

According to the results of the 2Q 2017 OESA Barometer, auto suppliers are concerned about U.S. trade policies.

Based on the results of a member survey of senior executives in the supply base, rising anxiety about possible changes to the North American Free Trade Agreement (NAFTA) and concerns about political discord in Washington, D.C., were the top issues among North American parts company executives in the latest Supplier Barometer.

The May-released survey indicates that the concerns were more prevalent in May — after the Trump administration's first 100 days — than at the beginning of the year.

"Obviously, there's a lot of

uncertainty

about trade policy; some manufacturers and suppliers are far more exposed than others."

Mike Jackson Executive Director, Strategy and Research, OESA

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"There's a lot of uncertainty about trade policy; some manufacturers and suppliers are far more exposed than others," - Mike Jackson The quarterly survey is an effort to index the North American supplier community's general business mood on a scale of 1 to 100, with 100 being the most upbeat. The May survey put the industry's mood at 51 — which remained positive yet registered a three-point decline from a reading of 54 in January 2017.

Last year during the U.S. presidential campaign, Donald Trump promised that if elected he would renegotiate the long-standing free-trade agreement among the U.S., Canada and Mexico or tear it up altogether. As president, Trump has moderated his tone yet maintains his stated objective of seeking to stimulate U.S. job growth.

Some supplier executives said the uncertainty is making it difficult for them to make decisions about their global and North American manufacturing needs; the survey found that the mood varies with the size of the company.

SUPPLIER BAROMETER

Smaller companies were more upbeat than their larger counterparts, as they are more regional, less exposed. Larger companies typically have much greater international exposure resulting from global sourcing patterns as the industry continues to evolve. The automotive industry in North America is more globally oriented than it has ever been, fostering high imports of vehicles and components while also bolstering high export potential outside the region. Proposed policy changes offer the potential to add cost and inject volatility into already established industry supply chains, especially as policy uncertainty is expected to remain over an extended horizon.

The new survey also found that suppliers were more concerned about skilled labor shortages in May than at the beginning of the year. The shortage of skilled workers is a constant concern among suppliers from quarter to quarter.

Despite U.S. vehicle sales levels which have softened, the industry remains on a robust product launch schedule which has buoyed the outlook of many suppliers in the survey.

Threats to the 2017 Outlook:

Source: OESA Supplier Barometer

One supplier executive commented, "Despite indicators that the market in North America has topped, our OEM customers are still moving forward with the projects we are developing." The industry certainly benefits from strong market demand, yet the fortunes of each supplier can vary greatly based on the strength of their product portfolio.

Suppliers with content on the right programs, including a disproportionate share of higher margin SUVs and pickups, hold the potential to outpace the industry. Even as robust utility and pickup demand is fueling stronger truck share across the industry, a dynamic product launch cadence only adds to the challenges for suppliers in the context of skilled labor.

For more information about the 2Q 2017 OESA Barometer, contact: Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

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OESA EVENTS 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, Inc. Officer Julie A. Fream* President and CEO Original Equipment Suppliers Association Officer Steve Handschuh* President and CEO Motor & Equipment Manufacturers Association *Executive Committee

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 7)

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OESA 2017 MARCOMM SUMMIT | JULY 12 Automotive marketing and communications executives are invited to attend the 3rd annual OESA MarComm Summit. The event will be held on July 12, 2017, at the Emagine Theater in Royal Oak, MI. It’s no secret, the mobility industry is changing. It has evolved and expanded more in the last five years than in its 100+ year history, and the momentum continues. Supplier technology is driving innovations in vehicle connectivity, safety and autonomous driving.

Trends in marketing are changing too, and it’s imperative that “marketeers” evolve as well. It is at this new era in automotive that OESA, and supporting partner roundtable6, host “Think Different. Market Different.”

Don’t miss this unique opportunity to hear from experts as they discuss the new B2B marketing landscape. Gain unique insight and actionable recommendations from successful industry marketers on what’s next in B2B. ► SUPPORTING PARTNER:

OESA SALES & PURCHASING: PARTNERS IN NEW BUSINESS PURSUIT CONFERENCE | JULY 27 OESA is hosting a Sales & Purchasing: Partners in New Business Pursuit Conference on July 27, 2017, at the Edward Hotel & Conference Center in Dearborn, Mich. The conference is structured to provide automotive supplier sales and purchasing executives with best practices for cost estimating and quoting, including practical advice on how purchasing and sales teams can work together to win more business.

The conference features industry insiders including an OEM executive who will highlight the benefits for both OEMs and suppliers from understanding true costs. Ruediger Stern, President of FACTON, Inc., will share insights on how enterprise product costing improves customer relationships and quote response times. Jeoff Burris, founder and principal, Advanced Purchasing Dynamics, will present best practices in costing purchased components.

Following the formal presentations, speakers will share their experience tying sales and purchasing together to win new business in a panel discussion.

For additional registration and program information, contact OESA at 248.952.6401 or info@oesa.org. ► SUPPORTING PARTNERS:

OESA EVENTS

OESA VOLKSWAGEN GROUP OF AMERICA TOWN HALL MEETING | AUG 14 OESA members and Volkswagen suppliers are invited to participate in the eighth annual Volkswagen Group of America Town Hall on Aug. 14, 2017, at the Laurel Manor in Livonia, Mich. VW’s executive vice president of purchasing, Mahesh Kodumudi will discuss Volkswagen’s sourcing strategy and regional footprint, and Joerg Grosskreutz, general manager, commodities, Volkswagen Group of America, will present Volkswagen’s plan for localizing content, cost optimization and what that means for suppliers’ long-term opportunity.

Following the formal presentations, Marty Ross, manager, central functions, Volkswagen Group of America, will join Kodumudi and Grosskreutz for the question and answer session.

Additional Volkswagen executives will be available for networking from 1 – 2 p.m. and following the formal meeting. Executives from the following functional areas are scheduled to be in attendance for networking: • All Commodities • Corporate Purchasing • Interior and Exterior Commodities • Electronic Commodities • Powertrain • Processes and Systems

OESA MEMBERS ONLY - TOYOTA TOWN HALL MEETING | AUG 22 OESA invites members to a Toyota Town Hall with Robert Young, group vice president, purchasing, supplier engineering development and cost planning, Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA), on August 22, 2017, at the Toyota Supplier Center in Saline, MI. Young is responsible for overseeing all vehicle parts and materials procurement, supplier preparation and cost planning for TEMA. To better serve its customers and position Toyota for long-term growth, Toyota recently established its headquarters in Plano, Texas, and expanded its engineering and purchasing in York Township, Mich. For suppliers, this move is meant to foster greater customer-supplier collaboration in product innovation and development.

For additional registration and program information, contact OESA at 248.952.6401 or info@oesa.org.

OESA Board of Directors (Continued from page 6) 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 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 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 James Verrier President and CEO BorgWarner Inc.

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OESA EVENTS

2017 OESA ANNUAL CONFERENCE – THE INDUSTRY’S NEW LANDSCAPE | NOV 13

The automotive industry has evolved more rapidly and expansively in the last five years than in its 100+ history, and the momentum continues. The future of the industry is here and now. Connected vehicles, autonomous driving, shorter design cycles, vehicle innovation, the need for new talent, ride-sharing and ongoing government discussions have changed the backdrop of the entire mobility industry.

It is at this new era in automotive that OESA launches the 2017 Annual Conference – The Industry’s New Landscape.

Join more than 600 automotive industry executives on Nov. 13, 2017, at the Suburban Collection Showplace in Novi, Mich., as presenters discuss the new landscape of the automotive industry from a supplier perspective.

Confirmed OEM presenters include: • Steve Kiefer, Vice President, Global Purchasing and Supply Chain, General Motors • Mahesh Kodumudi, Executive Vice President, Purchasing, Volkswagen Group of America • Sherif Marakby, Vice President, Autonomous Vehicles and Electrification, Ford Motor Company • Dr. G. Mustafa Mohatarem, Chief Economist, General Motors • Ziad “Z” Ojakli, Group Vice President of Government & Community Relations, Ford Motor Company • RJ Scaringe, CEO, Rivian Automotive • Susan Smyth, Chief Scientist, Global Manufacturing, General Motors • Shinichi Yasui, President, Toyota Engineering & Manufacturing North America • Bob Young, Vice President, purchasing, Toyota Engineering & Manufacturing North America Conference sponsorship opportunities are filling up fast. Don’t miss the chance to promote your organization to more than 600 automotive supplier executives. To tailor a sponsorship, contact Drew Rhodes, Manager, Business Development & Event Logistics, at drhodes@oesa.org and 248.430.5961.

For additional registration and program information, contact OESA at 248.952.6401 or info@oesa.org.

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OESA EVENTS

CALENDAR OF EVENTS UPCOMING EVENTS July

12 July

27 Aug

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Marketing Summit Emagine Theater Royal Oak, MI OESA Sales & Purchasing: Partners in New Business Pursuit Conference Edward Hotel & Conference Center Dearborn, MI Mobility Supplier Forum Q3 Futuris Automotive (US) Inc. Newark, CA

Aug

14 Aug

22 Sept

12

OESA Volkswagen Group of America Town Hall Meeting Laurel Manor Livonia, MI OESA Members Only Toyota Town Hall Meeting Toyota Technical Center Saline, MI SAVE THE DATE! FCA Town Hall TBD

UPCOMING OESA COUNCIL MEETINGS* July

11

July

12 July

20

Legal Issues Council OESA Conference Center Southfield, MI Joint Automotive Public Relations & Communication Executives Council Emagine Theater Royal Oak, MI Human Resources Council OESA Conference Center Southfield, MI

Aug

Chief Purchasing Officers Council OESA Conference Center Southfield, MI

Aug

SAVE THE DATE! Young Leadership Council 5 TBD

Aug

SAVE THE DATE! Environment, Health and Safety Council TBD

10 17 24

*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.

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