A panel discussion featuring experts from the Dykema law firm and The Right Place about automaker and supplier perspectives on the auto industry and U.S. economy, in the midst of the coronavirus pandemic and beyond.
Dykema, The Right Place and MICHauto recently conducted a survey of automakers, suppliers and business executives. The intent was to assess the state of the automotive industry during the pandemic, as well as how that might reflect the current condition and future of the U.S. economy at large.
Looking at the second half of this year, 45% of automotive respondents said they expect a decline in supply-chain orders over that time. But 46% predict an increase within the next 12 months when compared with the prior year, and 71% expect improved results within 24 months. The numbers suggest a tentative optimism over the speed of recovery of the industry and, by association, the U.S. economy. “It’s going to be a tough six months, but if we can get to the other end, the expectation is that the industry is going to be back and chugging along,” says Tom Vaughn, member of Dykema’s Corporate Finance Group as well as co-leader of its Mergers & Acquisitions Group.
In the shorter term, results were predictably bleak. Eighty-four percent of auto respondents were forced to suspend operations during the pandemic, but as of the time of the survey, only 20% had to suspend once more upon reopening, says Laura Baucus, member of Dykema’s Automotive Industry Team and leader in its Supply Chain Group.
A recovering industry won’t look the same as before the pandemic hit. Automakers are likely to reexamine strategies for where they manufacture, the length of their supply lines, and how much inventory they keep on hand as a hedge against future supply-chain disruptions.
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