Big 3 lags in Supplier Relationships

Ward's Auto World, Aug 1, 2002

A new study finds that by virtually every measure — the level of trust, handling of late engineering changes, opportunity for profitability and importance of cost vs. quality — Japanese auto makers are more desirable than the Big Three as business partners for suppliers.

Pressure on suppliers to cut prices is universal, but John Henke Jr., president of Planning Perspectives Inc. of Birmingham, MI, which surveyed 279 Tier 1 suppliers, says there is a vast difference in how that pressure is applied.

The Japanese transplants apply that pressure without threats, with more consistency and in a greater spirit of collaboration than domestic makers.

“The suppliers are telling us that cost is more important for the Big Three than it is for foreign domestics,” says Henke.

The study found Toyota Motor Mfg. North America Inc.; Honda of America Mfg. Inc.; and Nissan Motor Mfg. Corp. USA are benchmarks for supplier relations, while the survey finds fault with each of the Big Three.

The Chrysler Group had strong supplier relations until 1999; Ford Motor Co. relations have been in steady decline for a decade; and supplier trust with General Motors Corp. was low until 1999, spiked up, and has declined steadily since.