Will Chinese and Japanese Auto Parts Suppliers Rush into North America?

Last week, I shared my thoughts on this article from The Wall Street Journal. Despite the often failing battle that lower tier North American automotive suppliers find themselves in as they attempt to stay in the black, the need for their parts will not go away. So what does the future like? It might look quite Asian (Japanese, Korean and Chinese, to be exact), in fact. Just as Honda and Toyota have taken the automotive market by storm in the past two decades, their parts suppliers are likely to be eyeing North America as well. Or as the article puts it, "the next trend, which could eventually stabilize auto-supplier employment in North America, may well be a wave of Asian-based auto suppliers pushing to open up plants in the U.S."

As I look at this, it makes tremendous sense. The timing could not be more impeccable. Consider that the US dollar has never been weaker in recent memory, the Wall Street credit crunch is limiting parts supplier's ability to borrow and that domestic OEMs and tier ones are looking for alternative suppliers given the high probability that many of their current suppliers won't be in business in the next 24 months. And I've not even tossed on the fact that most states would kill to add new manufacturing jobs, offering up significant tax incentives to foreign investors opening new companies, operations or facilities.

But the big question is who will rush in from Asia and fill the void? Perhaps the Chinese could steal the thunder of Japan and Korea if they can move quickly enough (or at least provide investment dollars for such deals).

Jason Busch

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