Recovery for automotive suppliers requires holistic thinking, experts say
The COVID-19 pandemic came amid a series of compounding events that has put tremendous strain on automotive suppliers, and experts said thinking holistically and creatively will help the industry recover.
That message was delivered March 10 at the 23rd annual Michigan Automotive Suppliers Symposium, held in the DeVos Center and hosted by the Van Andel Global Trade Center, housed in the Seidman College of Business.
David Leich, executive director of global supply chain for General Motors, told the audience that it will take years to restore production levels, which are running 75 percent below 2020 inventory levels. Two years ago, there were 4 million new cars and trucks produced in the U.S., the current number is 1 million.
"The original equipment manufacturers are going to have to out produce demand to reverse the current trend," he said. "It will take years to restore inventory to what it was before."
He said GM has addressed supply chain issues with a "full company approach," rather than in silos, and gave an example of how the automaker reacted to the Canadian trucker protest that blocked the Ambassador Bridge, the busiest land border crossing between Detroit and Canada.
Leich said within 24 hours after the protest's first day, GM had arranged to shuttle semi-trucks across the Detroit River on car ferries.
"We had customs support on both sides of the border, help from the Coast Guard to break up the ice, all within 24 hours," he said.
Border issues, pandemic, natural disasters and computer chip shortages, among other crises, are now mapped and tracked by GM, allowing for almost instantaneous response, Leich said.
"We built dashboards to look at the health of our logistics, our supply base," he said. "The name of the game is now industry expectations and forecasting. We can map challenges, apply risk factors and then produce real-time alerts for disruptions."
During an earlier session, Adam Kochenderfer, associate general counsel at DRiV, a division of Tenneco Inc., said every link in the supply chain has an issue. For West Michigan automotive suppliers, Kochenderfer recommended proactive approaches to contracts, inventories and employees, noting dips in the labor force continue to hamper supply chains.
"There are opportunities, despite everything that has happened for the supply chain to come back much stronger than it was before; we have learned lessons from the recession in 2007, 2008," he said.