Unpredictability continues to define this economic era. For the third time in as many years, trouble in Greece has left eurozone financial markets in turmoil, while Spain is getting a bank bailout. The Chinese economy has slowed, while India and Brazil too have hit a snag. The US, with weak job growth, has a less optimistic outlook than even three months ago.
Nevertheless, there is no common trajectory for vehicle sales. In Europe—particularly in the south—they are falling from low levels, but in the UK, technically in recession, sales have been stable or positive. Germany, strong until recently, looks unsure but its brands are thriving at home and abroad. Russia is the region’s greatest hope for growth, but it epitomises unpredictability.
China and Brazil, following sales declines, may see their fortunes change, at least temporarily, thanks to credit easing and incentive schemes. Car sales in the US have been stronger than its economy and the market is on pace for its best year since the financial crisis, but risks abound.
Monthly sales reports, which can shift suddenly and irrevocably, are insufficient indicators for companies planning capacity and investment in the supply chain. However, along with industry forecasts, these are often all many providers have to work with when looking more than a few months in advance. One encouraging sign I’ve encountered recently has been a willingness by some OEMs to share their own individual projections and plans with key providers up to several years in advance.
Jaguar Land Rover’s global head of logistics, David Dyke, for example, wants his lead logistics providers aligned with the company’s five-year business plans (p16). This would ensure that the OEM and its LSPs move towards the same rough point on the horizon, and suppliers would be better prepared to take on new business when the opportunity arises.
But there are no guarantees—a few years ago, suppliers aligned to JLR’s five-year outlook would have expected to see one fewer plant, whereas now all of its factories are getting upgrades, with plans to expand in China.
But the medium-to-long term view from within a company provides more guidance to a provider than monthly sales or quarterly reports. And while nobody really knows the future, the best place for a supplier to get to know its customers’ longterm production plans is straight from the source.
Christopher Ludwig, Editor
tel: +44 (0)20 8987 0968
e: Christopher.Ludwig@ultimamedia.com
