Supply Chain Matters has featured a number of commentaries focused on production strategy shifts among both North America and global automotive supply chains. In late August of 2012, we featured a commentary related to Honda and its plans to shift a major portion of its export product capacity to North America from Japan.  The motivations for Honda were the continued appreciation of the Japanese yen and the risk implications of the 2011 devastating earthquake and tsunami that stuck Northern Japan. Honda’s long-term plans included the ability to ship 200,000 to 300,000 autos from North America to export markets in addition to satisfying U.S. domestic demand.

Last week we published a commentary reflecting on the stark contrasts that exist among Eurozone, China and U.S. automotive supply chains.  Tough political decisions strongly influenced by U.S. government in 2008-2009 have now allowed the U.S. automotive industry to be far more globally competitive in cost.

Yesterday, our observations were reinforced in a Wall Street Journal article titled: A Revitalized Car Industry Cranks up U.S. Exports. (Paid subscription of free metered view) The article once again reflects on Honda, with the statement that this automaker expects to export more vehicles from North America than in brings in from Japan by the end of 2014. In 2012, more than one million cars and light trucks were exported from U.S. auto plants, with Honda accounting for 90,000 of those vehicles. Honda continues on its target of 200,000 vehicle export capability. Among other auto makers, Toyota exported 124,00 vehicles BMW roughly 210,00, and Chrysler exported 210,000 vehicles including diesel engine models of its Jeep line destined for Europe. Chrysler has aggressive plans to up its export number to as many as 500,000 vehicles by the end of 2014.  According to the WSJ article, the current export volume of cars and light trucks is the equivalent of three or four big assembly plants.  Top export destinations are China, Saudi Arabia, Germany and South Korea.  

Similar to the need Supply Chain Matters raised in our 2012 commentary, the WSJ calls attention to plans for renovating a previously unused 48 acres at the Port of Baltimore as a new auto export logistics center to receive vehicles manufactured at Toyota plants in Kentucky, Indiana and Mississippi. We predict there will be more of such investments in the months to come.

The implication in these shifting trends is that U.S. automotive supply chains must also cater to the product-unique needs of certain export markets.  Here lies the importance of global platform strategies.  However, as we noted in our last commentary, there is a stark need to dynamically plan and respond to constantly changing and different geographic market scenarios. An industry that traditionally does not have tendencies to invest in more sophisticated business planning, end-to-end supply chain visibility, control tower and more predictive capabilities has the most to benefit from these capabilities.

Bob Ferrari