U.S. Original Equipment Automotive Industry Must Transform and Collaborate for Future Resilience and Relevance Finds Joint Research by Arthur D. Little and MEMA OE Suppliers

At a time of unprecedented volatility, the U.S. original equipment (OE) automotive industry is at an inflection point. Building resilience and driving reshoring requires concerted actions from policymakers, original equipment manufacturers and suppliers. This is the key message from Turbocharging US Automotive Manufacturing Competitiveness, an in-depth Arthur D. Little (ADL) landmark study, carried out in conjunction with industry body MEMA Original Equipment Suppliers.

The study draws on research from over 100 global OE automotive suppliers with major U.S. presence and more than 30 interviews with C-suite executives of leading global OE automotive suppliers. Based on ADL analysis, the research provides clear recommendations for transforming the industry to strengthen supply chain resilience and underpin national competitiveness and global relevance.

High import dependence exposes the U.S. OE automotive supply chain to cost volatility and geopolitical risk. Current reshoring efforts, driven by policy incentives and industry realignment, not only bring production home, but also secure long-term supply resilience and technology leadership.

The report analyzes the viability of this approach and critical gaps that remain across all major groups of auto parts and systems: body and chassis, EV batteries and motors, ICE engines and transmissions, interior and plastics, tires and rubber and electrics and electronics. It also examines how these groups are shaped by four key factors: labor, automation, supply chain, and regulation/policy.

Key constraints affecting all component categories, as highlighted by the research, include persistent skilled labor shortages, limited automation capabilities and a weak domestic supply base for industrial machinery. These challenges all stem from an overarching lack of historic holistic industrial policies comparable to competing countries.

Solving these bottlenecks must be balanced with the ongoing shift in vehicle architectures which will require building capabilities in high-performance semiconductors, advanced electronics, EV systems and software-defined integration. Each of these are also critical to adjacent industries such as aerospace and defense, construction and agricultural equipment, and marine and powersports.

Joern Buss, Partner, Automotive and Manufacturing Group, at Arthur D. Little, comments: “The US automotive supply chain faces unprecedented pressures, from technology shifts to geopolitical tensions. Ensuring its continued competitiveness and relevance requires close collaboration to reshape the industry. Our report highlights the strategic levers that will propel this transformation and the actions needed to foster change.”

Collin Shaw, president of MEMA Original Equipment Suppliers commented: "Vehicle suppliers are the largest manufacturing sector in the U.S. and a cornerstone of our national economy. Developed with industry insight and ADL’s expertise, this landmark study offers a roadmap to strengthen U.S. supplier competitiveness, accelerate innovation, and ensure our industry continues to lead on the global stage."

The full report can be downloaded here.

About Arthur D. Little
Arthur D. Little has been at the forefront of innovation since 1886. We are an acknowledged thought leader in linking strategy, innovation and transformation in technology-intensive and converging industries. We navigate our clients through changing business ecosystems to uncover new growth opportunities. We enable our clients to build innovation capabilities and transform their organizations.

Our consultants have strong practical industry experience combined with excellent knowledge of key trends and dynamics. ADL is present in the most important business centers around the world. We are proud to serve most of the Fortune 1000 companies, in addition to other leading firms and public sector organizations.

For further information, please visit www.adlittle.com.

About MEMA Original Equipment Suppliers
MEMA Original Equipment Suppliers exclusively serves vehicle original equipment (OE) suppliers, a part of the largest manufacturing sector in the United States and leading the way in new vehicle innovations. Members conceive, design, and manufacture the OE systems and technologies that make up two-thirds of the value of every vehicle, fueling international commerce and meeting society’s transportation needs. MEMA members are committed to safety and sustainability.

MEMA, The Vehicle Suppliers Association, is the leading trade association in North America for vehicle suppliers, parts manufacturers, and remanufacturers. It has been the voice of the vehicle supplier industry since 1904. Its more than 1,000 members are Strong by Association.

MEMA has offices in Southfield, Mich.; Research Triangle Park, N.C.; and Washington, D.C. Learn more at mema.org/original-equipment-suppliers.

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