Welcome to the Daily 5 report for Friday, Nov. 7. TGIF!
Since the invention of the automobile, carmakers have pressured parts suppliers to lower their costs. Nothing new, right? Except now it's coming at the cost of innovation and technology development.
As we learn in this story from our affiliate Crain's Detroit Business, automakers are pressing the supply chain more than ever for cost savings — with a lower priority on cutting-edge innovations being developed by their sophisticated global suppliers.
In fact, it's reaching the point where some of the big names in the supply chain aren't even bothering to present their technology at CES in Las Vegas in January. Several suppliers — including Forvia, American Axle & Manufacturing, Lear Corp. and Adient — are skipping the expo this year, while Magna International has scaled back its presence, Kurt Nagl wrote for Crain's. BorgWarner will have reps walking the floor but has never exhibited because it's too expensive, a spokeswoman told Nagl.
Sign up for the Daily 5 report here
Why bother investing in a CES booth when your automaker customers, in effect, tell you: "That's great stuff, maybe next year. We just want a lower price for your widgets ... now."
It's a conundrum that could impact the auto industry for years. The Detroit 3 are looking for ways to reshore production from Mexico to the U.S. This will be a costly proposition, especially with the outsized wage gains made by the UAW in the last contract. If they don't relocate manufacturing, they face President Donald Trump's higher tariffs. It's a no-win situation.
But the real penalty could be less innovation for domestic automakers compared with their competitors in Europe, Japan and China.
In the long run, supplier innovation will, of course, persist. And Automotive News will continue to celebrate supply chain technology development every year with our annual PACE awards.
Speaking of technology, the Nexperia chip crisis may finally be coming to an end with today's news out of Europe and China. Nexperia has resumed some shipments of its vital chips, auto executives said, welcoming signs of de-escalation in a fight for control of the company that has rattled the car industry, Reuters reported.
And, as expected, this week's fight between LaFontaine Automotive Group and Michigan regulators came to a quick settlement yesterday.
That's it for now. Have a great weekend.
