Auto Harness Industry Structure

Production of wiring harnesses is, despite automation of some elements of the process, labour-intensive. In the automotive industry car-makers do not themselves produce wiring harnesses: the cable purchaser is usually a specialist assembler of auto harnesses that supplies these items to the car-maker. In the commonly used industry terminology the car-maker is the OEM, the harness assembler is a Tier 1 supplier and the cable-maker is a Tier 2 supplier. The global harness industry is quite concentrated: according to CRU's estimates, the three largest players in the industry, Yazaki, Delphi and Sumitomo Wiring Systems, account for more than half of global production. The largest harness-makers usually have their own in-house facilities for cable production, though some auto cables are bought from external suppliers. As most harness production is located in low cost countries, the trend in cross-border trade is a good indicator of industry activity.


China Harness Exports

Chinese exports of vehicle harnesses (»wiring sets« classified under HS code 8544.30) have held up in 2008, with no clear signs of deterioration in the later months of the year, though trade data for the last two months are not yet available. It would not be surprising if trade data for November and December do show some slowdown, as the main destination for Chinese exports of vehicle harnesses is Japan, and November was by far the weakest month for Japanese car production. One factor helping to support Chinese harness exports is the continuing trend towards sourcing auto harnesses from low cost assembly operations in China, which will tend to mask any downturn in total harness demand.


US Harness Imports Slow

As would be expected from the slowdown in US vehicle production during 2008, imports of vehicle harnesses into the US have slowed during the year. The latest month for which US trade data are currently available is September 2008, and it is likely that there will be a further reduction in harness imports in the fourth quarter of the year. The main exporting country affected by this reduction in US imports is Mexico, which supplies about 65% of the total. In value terms imports of harnesses from Mexico were 23% lower in Q3 2008 than in Q3 2007. Imports into the US from ASEAN countries (mainly the Philippines) and from Central America (Nicaragua and Honduras) have also reduced, but have not been as strongly affected as imports from Mexico.


Shift in European Trade

In Europe there has been since May 2008 a decline in harness exports from some countries in Central and Eastern Europe (Poland, the Czech Republic, Hungary and Slovakia), though exports from some other East European countries (Romania, Bulgaria and Ukraine) have not been so severely affected. Though the move was already underway, it appears that the growing crisis in the auto industry has given an additional incentive to harness-makers that are shifting their assembly work to lower cost locations. In December 2008 Leoni announced that it would be cutting the workforce at its Polish harness-making operations from 1,650 employees to 400.