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News   March 1, 2024   by Adam Malik

What’s getting in the way of aftermarket nearshoring

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As automotive aftermarket suppliers look to exit China, they’re turning to locales closer to home or those that are more friendly in their relationships with their home nation.

But it may not be so easy to simply make the change.

“Reshoring might have some challenges,” Paul McCarthy, president of the MEMA Aftermarket Suppliers Association, said at the recent MEMA Aftermarket Suppliers Global Summit in Florida.

Aftermarket leaders are looking to reduce their dependence on China. Political risk is pushing them to find alternatives, McCarthy observed. Furthermore, he quoted a response from a CEO who shared that “single-source dependence, whether one manufacturer or a country of origin, is done.”

Bottom line: The industry is looking to change how it does business. But undoing the established way of things is leading to “generational hardship,” McCarthy said.

The shift is not a recent phenomenon, as much as one would think the COVID-19 pandemic was the impetus. McCarthy noted a study his group did in early 2019 that showed a shift in the global aftermarket footprint, which included existing China.

“This was happening before that,” McCarthy said. “The pandemic accelerated it, but there were structural drivers making this happen before.”

And it won’t be easy. “We are still very, very much a global industry,” McCarthy pointed out. “We can’t unwind this reality of what we’ve done over the last three decades — of all the investment, all this supply chin, all the relationships built around the world.”

Trade makes up so much of global commerce today compared to the Cold War days that “de-coupling” is difficult.

“So we’re at a very different baseline,” McCarthy observed.

And as other nations with less expertise take on the work of handling supply chains, issues could easily arise for the aftermarket.

“So we may have longer supply chains, less efficient supply chain, more steps in the supply chain,” McCarthy advised as companies look to become interdependent.

However, the need for China will never fully abate.

“When [our members] really look at their supply chain, there’s still some component, there’s still some input that is absolutely tied to China,” McCarthy said. “Decoupling is not an easy thing. And it’s not an inexpensive thing. So again, we’re very much an interconnected, global industry and aftermarket.”

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