Japan leads supplier relations
Survey raises questions about whether U.S. can catch foreign automakers

By Susan Carney / The Detroit News

Strong ties

Auto parts suppliers have better working relationships with Japanese automakers than with Detroit's Big Three. Suppliers' favorites, from best to worst:
   1. Toyota
   2. Honda
   3. Nissan
   4. Chrysler
   5. Ford
   6. GM
   Source: Planning Perspectives Inc.

DETROIT -- Along with more efficient factories and higher-quality products, Japanese automakers have better relations with auto parts makers than their American counterparts, according to a new survey.

The findings suggest that supplier relations may be as important as productivity and quality to the growing strength of Toyota, Honda and Nissan in the United States, and raise questions about whether GM, Ford and Chrysler will ever be able to stop the Japanese onslaught that is costing them U.S. sales and market share.

"Japan just keeps doing things better and better," said John Henke, president of Planning Perspectives Inc., a Birmingham-based automotive research firm that conducted the study. "They keep raising the hurdles."

The study was conducted from May to June and surveyed 279 suppliers representing about half of all annual North American parts sales to six major automakers: Japan's Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., and Detroit's General Motors Corp., Ford Motor Co. and the Chrysler Group of DaimlerChrysler AG.

The suppliers ranked Honda and Toyota the best companies to work with by a 30-percent margin over GM, Ford and Chrysler.

The findings come as Ford and Chrysler aggressively push suppliers for cost cuts as part of broad restructurings designed to restore profits. Yet GM, currently the healthiest of Detroit's Big Three, is considered the worst to work with.

"GM is working with suppliers very early in vehicle development and working to forge more collaborative relationships," said GM spokeswoman Renee Rashid-Meram. "We're seeing consistent gains in quality from the efforts of GM and our suppliers."

Chrysler fared slightly better than GM and Ford in the survey, but still lagged behind all Japanese competitors.

"Chrysler Group continues to outpace its crosstown rivals in overall supplier relations even as we've had to move toward a more performance-oriented approach to supplier selection in the last two years," said Chrysler spokesman David Barnas.

Although all automakers -- Japanese and American alike -- are pushing suppliers for price cuts, the study found no relationship between the degree of pricing pressure and how suppliers feel about specific manufacturers.

"The difference is how they carry out the price reduction demands," Henke said.

Suppliers said GM, Ford and Chrysler emphasize price three times more than component quality when awarding contracts, while Toyota, Honda and Nissan balance quality and cost demands more equally.

A key driver in building better relationships is trust.

Parts makers said Japanese automakers communicate more regularly, more openly and more honestly than Detroit's Big Three. There is less impact on suppliers from last-minute engineering changes.

Japanese automakers cover more of a parts maker's costs when car and truck programs are delayed or cancelled. They do more to help suppliers reduce their costs and improve their quality. And they are more sensitive to the impact of cost reduction demands on suppliers' profits.

You can reach Susan Carney at (313) 222-2287 or scarney@detnews.com.