It's become apparent that geographic diversity is a necessity for U.S. auto parts suppliers. The earnings reports issued this week by ArvinMeritor
On the one hand, ArvinMeritor posted a profit of $44 million on revenues that jumped 21% higher as sales in South America and the Asia Pacific region fueled results. Then there was Lear, which reported that earnings plunged 85% on net sales that were 4% lower as it was socked by the strike at American Axle
The key phrase coming out of these reports is "customer diversity." When your biggest customer is hanging over the abyss of bankruptcy itself, you can't expect your own results to do well.
That's why BorgWarner
Lear seems to be taking these lessons to heart as it expands its global presence. Indeed, international sales at the automotive seating and electronics maker were up 14% in the quarter, and it has a "new global organization structure" in place. But that's not enough for it to see industry conditions improving this year; it lowered full-year expectations and admitted conditions may worsen into 2009.
It's a global marketplace. Auto suppliers, who once did well by cozying up to their biggest customers, need to cut the apron strings and seek out new partnerships outside the U.S.
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