The Right Place, Inc. hosted the second session of its new Navigate 2020 webinar series in mid-June. The webinar featured IHS Markit Executive Director for Automotive Advisory Services, Michael Robinet, who provided a deep dive into the new structures driving post-COVID automotive supplier strategy.
Robinet kicked off the session by noting that production restarts are going relatively well, despite concerns over the supply chain not surviving the COVID-19 economic shutdown. While he doesn’t consider the industry to be ‘out of the woods’ yet by any degree, the supply chain has displayed considerable resilience in the face of current conditions.
On the other hand, Robinet also noted that the months of June and July will be low-revenue periods, generally speaking. As production ramps up again, manufacturers will see more money going out the door as opposed to coming in. With longer periods of production/payment windows, the brunt of this effect will be felt during the first two months, when this cycle will have to restart after a prolonged stop.
Robinet also explained that mid-size Tier 1 and 2 suppliers are currently considered to be at highest risk, due to a lack of diversification within their production focuses. Alternatively, small manufacturers and start-ups will have the benefit of being nimbler and more adaptive in the months to come.
With current outlooks, Robinet strongly recommended that West Michigan suppliers re-evaluate strategy and use this time to seek out new opportunities and expand their current scopes to reduce risk. Strategic partnerships and acquisitions, he said, will be critical to move companies forward and allow them to adopt new technology in a timely manner.
Watch the full webinar recording here: