Neil de Koker is president and CEO of the Original Equipment Suppliers Association (OESA) representing 410 companies in the US with global automotive sales of US$300bn. While living in Canada, he was also on the board of the Automotive Parts Manufacturers Association of Canada. In the first of two interviews, the CEO talked to Simon Warburton on the sidelines of this year’s North American International Auto Show in Detroit about the auto industry’s remarkable recovery in the US.
j-a: To what extent were your members affected by the recession of the previous years?
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NDK: “We had almost 10% unemployment and in Michigan, it was 14%. 2008 and 2009 were the real bottom [and in] 2010 we started to recover somewhat. In 2011 we gained nearly one million sales in vehicles so we intend on 12.6m this year.
“We were in the 15m/16ms for most of the 2000s, but the crisis caused us to take out a significant amount of overhead. The industry laid off more than 300,000 employees. As a result of that, now that we are starting up again, our break-even is low.”
j-a: To what extent are your members starting to see profits return?
NDK: “We have a number of suppliers that are showing very strong profitability. We are being very, very careful [about] adding additional capacity and people. Now we are having significant challenges hiring people.
“No-one is expecting another recession [although] we do expect continued pressure from Europe.”
j-a: To what extent is the US political landscape having an effect on the auto industry?
NDK: “Congress is so busy trying to prevent the opposition party from winning, that they are focused on doing anything to hurt the incumbent administration. As a result we can’t reach an agreement that is good for the country and it is absolutely a shame – it has got worse and worse over the years.”
j-a: Despite the political logjam, are Americans purchasing new vehicles?
NDK: “We have a car parc of about 250m vehicles in this country. The average age is around 8.5 years and most recently, it is around 10.4 years. We scrap around 13m vehicles per year and have been selling less than that for the past few years.”
j-a: Does the size of the US create difficulties for a body such as OESA to represent its members?
NDK: “OESA is concentrated in the Mid-West, so we are head-quartered where most of the industry is located. Honda/Ohio, Nissan/Tennessee and Detroit [for example]. Even Hyundai, which has manufacturing operations in Alabama has a technical centre 30min from Detroit.
“We have several hundred suppliers who have headquarters in Michigan and several hundred more who have sales offices here. We are affiliated to the Motor and Equipment Manufacturers Association [MEMA] – around 50% of the MMEA membership is OESA.”
