Automotive supply chain braces for change

Automotive industry executives are bracing for changes to their supply chains in light of the newly negotiated the United States Mexico Canada Agreement (USMCA), according to a survey from cloud-based cost-management solutions provider LevaData, released today.
Most of the 100 auto-industry executives surveyed said the USMCA will have a positive long-term effect on their companies, but they also said they expect cost increases in the short term, which will lead to higher costs for consumers. "These findings were generally in the direction of what we expected," said Rajesh Kalidindi, founder and CEO of Levada. "[Auto industry executives] see the benefits of increasing production in the U.S., but they were also very clear they felt it would have some near-term drawbacks related to the cost impact." Nearly 80 percent of survey respondents said they expect the USMCA to benefit their companies in the long term, with more than half saying it will ultimately increase North American vehicle manufacturing and provide a net improvement for workers and consumers. On the flip side, 41 percent of respondents said they expect production costs to increase by 10 percent over the next three years due to the USMCA while 26 percent said costs could increase by 25 percent or more in that timeframe. Nearly 60 percent said the increases will result in higher costs for consumers, according to Levada.