What The Globalizing Supply Chain Means For The Auto Industry

Tomorrow Latin America’s largest automotive trade show gets under way in Sao Paolo, An increasingly globalizing supply chain means auto companies need to train workers to communicate with suppliers abroad.Brazil. The São Paulo International Motor Show, which takes place every two years, and has become not only one of the largest events of its kind worldwide, but also one of the most exuberant. And for good reason. Brazil’s car market is booming: Brazil is the fourth largest car buying market worldwide, and the the seventh largest producer. But just because a manufacturer is based in Japan, U.S., or Brazil, that doesn’t mean that the design and manufacture of its products are equally domestic. As the auto industry has expanded and globalized, manufacturers have turned more and more to outsourcing and the global supply chain to run the logistics of their operations.

However, increasing international involvement in the manufacturing process can have more significant consequences for companies.

The supply chain, globalizing

Economic events of recent years have resulted in manufacturing ramifications for the auto industry. In fact, according to Auto News, the auto industry’s supply chain in North America is on track to experience a 40 percent bottleneck, significantly slowing the rate at which new cars can be produced. Even more alarming is the drop in tooling capacity – the ability to create parts and tools used for auto construction – that is largely causing this production slowdown. As Auto News reported, the five-year outlook for auto manufacturing projects that the industry will be $6 billion behind on its tooling requirements.

The Great Recession of 2008, as well as an aging auto manufacturing workforce, has put strain on the U.S. industry’s capacity to keep up with demands. However, it has also created opportunities for new markets to develop their roles, in turn globalizing the supply chain. Specifically, Chinese auto manufacturers have been quick to rise to fill the gap left by the tooling and manufacturing shortage in the North American industry, according to Auto News. While this isn’t to say that U.S. auto manufacturers are going to be phased out when it comes to delivering U.S.-made cars to the public, it does imply that foreign companies may begin to take a more involved role in that process.

The development of foreign markets

In perhaps an ironic turn of events, Chinese and other foreign companies are responding to the tooling shortage in the U.S. manufacturing market by moving in and establishing factories in the U.S.

As CEO of Harbor Results Laurie Harbour told Auto News, “They’ve been visiting tool shops in the U.S. and Canada and they know there’s a capacity shortage. Somebody’s going to fill it. We’re not going to not launch vehicles.”

This means that auto manufacturers will need to open their doors and their lines of communication to these newer foreign-based companies in order to keep on top of their manufacturing and tooling needs. While functionally speaking little is likely to change for the front-line employees working in the plants, the U.S. auto executives will benefit greatly from adapting their business communication skills to interact efficiently and respectfully with such companies. Chinese companies may be setting up shop on U.S. soil, but those auto makers who embrace foreign language training for businesses will be putting themselves at an advantage when it comes to facilitating communication.

Not only is it a good move for fostering business relationships, but encouraging corporate language training can be an important step in driving efficiency. In a field such as auto manufacturing that requires a great deal of precision, both quantitatively – communicating volume of orders, and qualitatively – determining the specifications to which each order should be completed, to maintain the efficiency of the entire supply chain. Such precision is crucial for avoiding costly recalls due to improperly tooled parts, and can also save manufacturers money by reducing excess or waste orders.

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