Top Suppliers Supplement - S3

> INSIDE: Top 100 global suppliers I PAGES 4-8 I Top 50 Europe suppliers I PAGES 9-10 I Top 100 North American suppliers I PAGES 11-15 I
Top suppliers' mettle tested in tough year
A
Alexa St. John
astjohn@crain.com
s disruptive as the global microchip
shortage has been to automakers and
suppliers so far this year, it is also just
the latest in a long line of challenges
that have thwarted business planning and outlooks
around the industry since the waning
days of 2019.
Much of that disruption can be laid at the feet
of the COVID-19 pandemic. But not all of it.
Since late 2019, the world's biggest auto parts
suppliers have been knocked off their game by
a decline in the now-critical vehicle market of
China. That segued into the first widespread
appearance of COVID-19 shutdowns across the
Chinese industry, which in turn segued into
production and consumer-demand shutdowns
across Europe and North America.
Not surprisingly, the 2021 Automotive News
Top Suppliers ranking of the industry's biggest
producers of original equipment content for automakers
shows that the vast majority of major
parts companies posted sales declines in 2020.
But equally notable: In many cases, the flurry of
business punches taken by suppliers last year
did relatively minor revenue damage.
Electronics and propulsion system supplier
BorgWarner's estimated 2020 original equipment
volume of $9.97 billion was just 2.2 percent
lower than its 2019 results.
Japanese
lighting supplier Koito Manufacturing reported
a mere 1.1 percent dip to $7.36 billion in
2020. And Eberspaecher Gruppe, the privately
owned German producer of exhaust, heating
and air conditioning systems, managed to deliver
an 8.2 percent increase in sales during
the year, to $6.02 billion.
" If I had to say anything surprised me, it
would be the resiliency of not only the OEMs,
but the supply base - to be able to get health
inspectors and safety equipment and COVID
testing, " said Marcus Hudson, executive director
of Calderone Advisory Group.
Revenue pressures told only part of the story
last year. In the face of the unknown, suppliers
scrambled to tap credit lines, evaluated
reshoring moves and local warehousing possibilities,
shared best practices with each other
and implemented strange new safety protocols
to keep customer programs moving.
At the same time, they stayed on track with
long-term strategies to help the industry move
rapidly into its new era of electrification.
As another testament to supplier resiliency,
despite the year's chaos, the industry's 10 largest
parts companies remained the same - although
with a little shuffling.
Robert Bosch and Denso are still the world's
top two largest at No. 1 and No. 2, respectively,
just as in 2019. ZF Friedrichshafen jumped two
spots to No. 3 this year, while Magna International
Inc. fell one spot to No. 4. Aisin Corp. jumped
to No. 5 from No. 6 last year, and Continental
dropped two spots to No. 6 from No. 4. The final
four of the top 10 - Hyundai
Mobis, Faurecia, Lear Corp.
and Valeo - remained in the
same order as their global
rankings last year.
" There's a culture of resiliency
in the auto industry
that I think is admirable, "
Patrick Anderson, CEO of
Anderson Economic Group,
a research company in East
Lansing, Mich., told Automotive
News. " I look at the auto industry and
give them a wartime medal because they delivered
for their employees and customers in a
terrible year. "
But Anderson warned that suppliers still face
In between the industry's pandemic-induced
shutdown and the ramp back up, suppliers
were forced to steer through liquidity
troubles as vehicle programs halted, navigate
unpredictable customer restart delays and
work with inconsistent manufacturing restrictions
across state lines.
Then, as their plants returned to work, suppliers
established health and safety protocols
to keep the wheels turning, but at the same
time struggled to retain manufacturing labor.
A year of logistics troubles and clogged customs
traffic at U.S. borders and ports saw some
suppliers re-evaluate established procurement
models, reconsider international supply
chains and recalculate costs with additional
local warehousing added to the equation.
" It was a daily kind of firefighting, " said Laurie
Harbour, CEO of the suburban Detroit auto
manufacturing consultancy
Harbour Results Inc. " It was
a theme of inconsistent demand,
tied with massive labor
challenges, tied with
massive demand, all sort of
unprecedented. "
Lear, ranked No. 9 globally
Hudson: Issue is
short-term views
Anderson: " Real
crisis " in industry
with 2020 sales of $17.05 billion,
made a name for itself
by releasing its Safe Work
Playbook. The openly distributed
industry document detailed safety
protocols as well as best practices for communicating
work procedures with employees.
Many suppliers also stepped up to help with
operating challenges. The lingering ripples of
the pandemic and the resulting industrywide
shortage of microchips and other resources
have alerted the industry that it has supply
chain problems that need to be fixed.
" The auto industry has a real crisis now, " Anderson
said. " It was able to address many of
the challenges of the public health crisis, to its
credit. But I don't think the industry has come
to grips with the risks we have now. "
the " arsenal of health " to produce medical supplies
for the nation. Employees from parts supplier
Denso, with global sales of $41.13 billion
last year, began 3D-printing face shields from
home and helped front-line workers. Engineers
from seating supplier Adient, the industry's
No. 14 parts company, produced personal
protective equipment. Adient saw sales of
$12.67 billion last year, despite a 23 percent decline
in sales to automakers.
Despite the emergency distractions, suppliers
still engaged in strategic business decisions.
German parts giant ZF Friedrichshafen
pressed ahead with its acquisition of U.S.-based
Wabco Holdings Inc. in a move to bolster the
companies' play in commercial vehicles. The $7
billion deal closed in May, just as the industry
began to ramp back up from the shutdown.
No. 23 BorgWarner Inc. closed on its acquisition
of powertrain supplier Delphi Technologies,
a deal with an enterprise value of $3.2 billion,
in the hopes of better positioning itself for
the future of electrification.
" The best suppliers were still realizing that a
new form of electrification is coming, and we
couldn't halt our investment, " Harbour said.
" What you saw at the OEM level was absolutely
a recommitment to that technology because, of
course, the new startups were becoming even
more relevant, and the suppliers that are good
ones having to follow behind that. "
Leadership changes also rippled through the
industry. Continental, with $29.68 billion in
2020 original equipment sales, installed a new
president for its North American business just
weeks into the pandemic. And North America's
largest supplier, Magna, saw 21-year company
veteran Don Walker announce his retirement
as CEO in October. Magna reached $32.65 billion
in sales to automakers last year, even with
a 17 percent decline in sales from 2019.
Hudson believes that the industry is in the
current predicament because automakers
thought short term, Hudson said.
" For once in our lifetime, demand actually
exceeds capacity, " Hudson said. " But the lack
of capacity and the lack of supply has driven
up prices, which is reducing margins for the
supply base, part of which was covered up by
[Paycheck Protection Program] loans.
" Those aren't new to 2021, " he added. " The
surprise, frankly speaking, is that all this stuff
hasn't resolved itself by now.
" The supply base is going to have to, for lack
of a better term, make things right. Suppliers
cannot continue down this path. It just is not
sustainable. "
3

Top Suppliers Supplement

Table of Contents for the Digital Edition of Top Suppliers Supplement

Top Suppliers Supplement - SIntro
Top Suppliers Supplement - S1
Top Suppliers Supplement - S2
Top Suppliers Supplement - S3
Top Suppliers Supplement - S4
Top Suppliers Supplement - S5
Top Suppliers Supplement - S6
Top Suppliers Supplement - S7
Top Suppliers Supplement - S8
Top Suppliers Supplement - S9
Top Suppliers Supplement - S10
Top Suppliers Supplement - S11
Top Suppliers Supplement - S12
Top Suppliers Supplement - S13
Top Suppliers Supplement - S14
Top Suppliers Supplement - S15
Top Suppliers Supplement - S16
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