U.S. Parts Makers Prefer Honda, Toyota
08-02-04, 06:07 PM
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U.S. Parts Makers Prefer Honda, Toyota
http://www.reuters.com/newsArticle.j...toryID=5836910
http://www.detnews.com/2004/autosins...tos-229933.htm
By Susan Kelly
CHICAGO (Reuters) - U.S. auto parts makers are shifting their loyalties to Japanese automakers and away from the domestic Big Three as relationships with Detroit steadily deteriorate, according to a new study.
The shift could have dire implications for the domestics and their ability to compete as suppliers devote more resources in research and development, technological advances and quality innovations to the Japanese automakers, according to the study by Planning Perspectives, a Birmingham, Michigan-based consulting firm.
U.S. automakers in recent years have grown reliant on profit-eroding consumer incentives to sell cars and slow market share losses to the Japanese. They have also come to expect price cuts from suppliers to help offset the shortfall.
Now, parts makers are increasingly getting squeezed as the cost of steel and other raw materials have skyrocketed.
"U.S. automakers continue hammering their suppliers for price reductions and multimillion-dollar cash givebacks, and suppliers are responding by giving them less support," the study found.
Parts makers participating in the annual survey said they prefer to do business with Toyota Motor Corp. (7203.T: Quote, Profile, Research) and Honda Motor Co. (7267.T: Quote, Profile, Research) because in those relationships they are treated as partners rather than adversaries and stand a better chance of making an acceptable financial return.
Suppliers' trust of General Motors Corp. (GM.N: Quote, Profile, Research) and Ford Motor Co. (F.N: Quote, Profile, Research) has never been lower, while trust in the Japanese carmakers has never been higher, the study found.
"In all the other industries we've studied, such as aerospace, electronics and computers, no one treats their suppliers as poorly as the U.S. automakers do," John Henke, author of the annual study, said.
More than 220 suppliers participated in the survey, comparing their relationships with Toyota, Honda, Nissan Motor Co. (7201.T: Quote, Profile, Research) , General Motors, Ford and DaimlerChrysler AG (DCXGn.DE: Quote, Profile, Research) .
The study found that the U.S. Big Three primarily focus on cost, while the Japanese also want low costs, but balance that goal with an emphasis on quality and technology.
Furthermore, the Big Three have "little regard" for suppliers' proprietary information or intellectual property, while the Japanese value and safeguard suppliers' new ideas, according to the study.
With the Japanese carmakers, "suppliers aren't going to have to worry about their intellectual property being given away to other suppliers with the lowest price," Henke said in an interview.
The differing approaches "might well be a major factor in the consistently high quality and competitive gains by the Japanese," the study concluded.
CHICAGO (Reuters) - U.S. auto parts makers are shifting their loyalties to Japanese automakers and away from the domestic Big Three as relationships with Detroit steadily deteriorate, according to a new study.
The shift could have dire implications for the domestics and their ability to compete as suppliers devote more resources in research and development, technological advances and quality innovations to the Japanese automakers, according to the study by Planning Perspectives, a Birmingham, Michigan-based consulting firm.
U.S. automakers in recent years have grown reliant on profit-eroding consumer incentives to sell cars and slow market share losses to the Japanese. They have also come to expect price cuts from suppliers to help offset the shortfall.
Now, parts makers are increasingly getting squeezed as the cost of steel and other raw materials have skyrocketed.
"U.S. automakers continue hammering their suppliers for price reductions and multimillion-dollar cash givebacks, and suppliers are responding by giving them less support," the study found.
Parts makers participating in the annual survey said they prefer to do business with Toyota Motor Corp. (7203.T: Quote, Profile, Research) and Honda Motor Co. (7267.T: Quote, Profile, Research) because in those relationships they are treated as partners rather than adversaries and stand a better chance of making an acceptable financial return.
Suppliers' trust of General Motors Corp. (GM.N: Quote, Profile, Research) and Ford Motor Co. (F.N: Quote, Profile, Research) has never been lower, while trust in the Japanese carmakers has never been higher, the study found.
"In all the other industries we've studied, such as aerospace, electronics and computers, no one treats their suppliers as poorly as the U.S. automakers do," John Henke, author of the annual study, said.
More than 220 suppliers participated in the survey, comparing their relationships with Toyota, Honda, Nissan Motor Co. (7201.T: Quote, Profile, Research) , General Motors, Ford and DaimlerChrysler AG (DCXGn.DE: Quote, Profile, Research) .
The study found that the U.S. Big Three primarily focus on cost, while the Japanese also want low costs, but balance that goal with an emphasis on quality and technology.
Furthermore, the Big Three have "little regard" for suppliers' proprietary information or intellectual property, while the Japanese value and safeguard suppliers' new ideas, according to the study.
With the Japanese carmakers, "suppliers aren't going to have to worry about their intellectual property being given away to other suppliers with the lowest price," Henke said in an interview.
The differing approaches "might well be a major factor in the consistently high quality and competitive gains by the Japanese," the study concluded.
Monday, August 2, 2004
Study: Big Three relations with suppliers at rock bottom
By John Porretto / AP Auto Writer
DETROIT -- U.S. auto parts suppliers are shifting their loyalties and resources to Japanese automakers at the expense of the Big Three, who generally treat suppliers as adversaries, according to a new study.
U.S. automakers, relying more than ever on profit-eroding consumer incentives, continue to hammer parts and components makers for price reductions and multimillion-dollar cash givebacks.
Suppliers, in turn, are responding by giving them less support in areas such as service and research and development, said the study released Monday by the Birmingham-based firm Planning Perspectives Inc.
“In all the other industries we’ve studied such as aerospace, electronics and computers, no one treats their suppliers as poorly as the U.S. automakers,” said Planning Perspectives’ John W. Henke Jr., who has studied supplier/automaker relations since 1990 and began this particular survey in 2001.
The 2004 survey was done last month and involved 223 industry suppliers. It measured five key areas: relationship, communication, help, hindrance and profit opportunity.
Among the findings:
-- DaimlerChrysler AG’s Chrysler Group, General Motors Corp. and Ford Motor Co. are falling behind Honda Motor Co. and Toyota Motor Corp. at an increasing rate in supplier relations.
-- Suppliers are increasing product quality at a greater rate for Japanese automakers, while merely maintaining quality levels for Detroit’s Big Three.
-- Supplier trust of Ford and GM has never been lower, while trust for the Japanese manufacturers has never been higher.
GM spokesman Tom Wickham said the automaker -- the world’s largest -- was disappointed in some of the study’s findings, particularly in factors such as quality and communication, where the company said it’s made significant progress.
Wickham noted that GM’s 33 percent improvement in J.D. Power’s closely watched initial quality survey since 1999 has outpaced Toyota’s 25 percent gain. Still, GM has had a spate of costly recalls this year involving several million vehicles.
“GM must grow market share, and to accomplish that we must be a low-cost producer of high-quality vehicles,” Wickham said. “This is an imperative we will continue to drive. Our best suppliers are aligned with us and understand this strategy.”
The study’s findings come at a time when Asian automakers continue to increase manufacturing capacity, model offerings and market share in the United States. For the first six months of 2004, the 10 major Asian automakers selling cars and trucks in the U.S. market saw their share grow to 34.3 percent from 32.4 percent a year ago, according to Autodata Corp.
At the same time, the combined U.S. share for GM, Ford and Chrysler fell to 59 percent from 60.6 percent.
In a recent interview with The Associated Press, Kathleen Ligocki, president and chief executive of Novi-based Tower Automotive Inc., said she felt the cost pressures on suppliers started not with the automakers but with consumers because of their many competitive choices.
“The fat is being squeezed out -- you could argue unevenly,” said Ligocki, whose company’s clients include every major automaker. “But in the end, if consumers aren’t going to pay for it and shareholders aren’t going to subsidize it, there’s not a lot of room for waste in the system.”
Study: Big Three relations with suppliers at rock bottom
By John Porretto / AP Auto Writer
DETROIT -- U.S. auto parts suppliers are shifting their loyalties and resources to Japanese automakers at the expense of the Big Three, who generally treat suppliers as adversaries, according to a new study.
U.S. automakers, relying more than ever on profit-eroding consumer incentives, continue to hammer parts and components makers for price reductions and multimillion-dollar cash givebacks.
Suppliers, in turn, are responding by giving them less support in areas such as service and research and development, said the study released Monday by the Birmingham-based firm Planning Perspectives Inc.
“In all the other industries we’ve studied such as aerospace, electronics and computers, no one treats their suppliers as poorly as the U.S. automakers,” said Planning Perspectives’ John W. Henke Jr., who has studied supplier/automaker relations since 1990 and began this particular survey in 2001.
The 2004 survey was done last month and involved 223 industry suppliers. It measured five key areas: relationship, communication, help, hindrance and profit opportunity.
Among the findings:
-- DaimlerChrysler AG’s Chrysler Group, General Motors Corp. and Ford Motor Co. are falling behind Honda Motor Co. and Toyota Motor Corp. at an increasing rate in supplier relations.
-- Suppliers are increasing product quality at a greater rate for Japanese automakers, while merely maintaining quality levels for Detroit’s Big Three.
-- Supplier trust of Ford and GM has never been lower, while trust for the Japanese manufacturers has never been higher.
GM spokesman Tom Wickham said the automaker -- the world’s largest -- was disappointed in some of the study’s findings, particularly in factors such as quality and communication, where the company said it’s made significant progress.
Wickham noted that GM’s 33 percent improvement in J.D. Power’s closely watched initial quality survey since 1999 has outpaced Toyota’s 25 percent gain. Still, GM has had a spate of costly recalls this year involving several million vehicles.
“GM must grow market share, and to accomplish that we must be a low-cost producer of high-quality vehicles,” Wickham said. “This is an imperative we will continue to drive. Our best suppliers are aligned with us and understand this strategy.”
The study’s findings come at a time when Asian automakers continue to increase manufacturing capacity, model offerings and market share in the United States. For the first six months of 2004, the 10 major Asian automakers selling cars and trucks in the U.S. market saw their share grow to 34.3 percent from 32.4 percent a year ago, according to Autodata Corp.
At the same time, the combined U.S. share for GM, Ford and Chrysler fell to 59 percent from 60.6 percent.
In a recent interview with The Associated Press, Kathleen Ligocki, president and chief executive of Novi-based Tower Automotive Inc., said she felt the cost pressures on suppliers started not with the automakers but with consumers because of their many competitive choices.
“The fat is being squeezed out -- you could argue unevenly,” said Ligocki, whose company’s clients include every major automaker. “But in the end, if consumers aren’t going to pay for it and shareholders aren’t going to subsidize it, there’s not a lot of room for waste in the system.”
Last edited by LexusLuver; 08-02-04 at 06:19 PM.
08-03-04, 08:31 AM
#3
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Posts: n/a
http://www.thecarconnection.com/inde...&sid=173&n=156
Suppliers Get Warned by Lutz
While recent additions to the General Motors lineup have been winning praise from critics and consumers alike, skeptics continue to fault lackluster interior design as the automaker's Achilles heel. You won't get more than a token argument from GM Vice Chairman Bob Lutz. Despite the fact that "We're making enormous progress," he told TCC, "It's one of the areas of huge focus." And it's an area where Lutz says blame should be spread around. GM is willing to spend the money it takes to get world-class interiors, he asserted, but Lutz insisted the giant automaker is not always getting what it's paying for. High-line materials and finishes shown in prototype parts do not necessarily materialize when the same interior components are delivered to the assembly line, he lamented. "This is not a threat. It is a promise," Lutz growled. "If we can't get it from American suppliers, we will find other solutions." -Paul A. Eisenstein
Suppliers Get Warned by Lutz
While recent additions to the General Motors lineup have been winning praise from critics and consumers alike, skeptics continue to fault lackluster interior design as the automaker's Achilles heel. You won't get more than a token argument from GM Vice Chairman Bob Lutz. Despite the fact that "We're making enormous progress," he told TCC, "It's one of the areas of huge focus." And it's an area where Lutz says blame should be spread around. GM is willing to spend the money it takes to get world-class interiors, he asserted, but Lutz insisted the giant automaker is not always getting what it's paying for. High-line materials and finishes shown in prototype parts do not necessarily materialize when the same interior components are delivered to the assembly line, he lamented. "This is not a threat. It is a promise," Lutz growled. "If we can't get it from American suppliers, we will find other solutions." -Paul A. Eisenstein
08-03-04, 08:45 AM
#4
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This is rediculous.
US Automakers should have, as soon as imports began to become a threat, downsized and concetrated their operations on creating truly competitive vehicles. The times required a huge shift in the way autos were brought to market. They didn't do this - and they still aren't doing it even now. In my opinion - GM is creating some of the best domestic vehicles ever (certainly competitive with the likes of Recall-Nissan and some other imports) - and people still discount them (or expect a seriously good deal) for being American.
Had GM, Chrysler, and to a lesser extent, Ford, reduced the number of brands they were attempting to carry through the 80's and 90's - and poured a great deal of R&D into a cohesive line of vehicles during that time, onward - I don't see that we'd be having this discussion today.
M.
US Automakers should have, as soon as imports began to become a threat, downsized and concetrated their operations on creating truly competitive vehicles. The times required a huge shift in the way autos were brought to market. They didn't do this - and they still aren't doing it even now. In my opinion - GM is creating some of the best domestic vehicles ever (certainly competitive with the likes of Recall-Nissan and some other imports) - and people still discount them (or expect a seriously good deal) for being American.
Had GM, Chrysler, and to a lesser extent, Ford, reduced the number of brands they were attempting to carry through the 80's and 90's - and poured a great deal of R&D into a cohesive line of vehicles during that time, onward - I don't see that we'd be having this discussion today.
M.
Last edited by whipimpin; 08-03-04 at 08:48 AM.
08-03-04, 09:32 AM
#5
Lexus Fanatic
Originally posted by 1SICKLEX
http://www.thecarconnection.com/inde...&sid=173&n=156
Suppliers Get Warned by Lutz
While recent additions to the General Motors lineup have been winning praise from critics and consumers alike, skeptics continue to fault lackluster interior design as the automaker's Achilles heel. You won't get more than a token argument from GM Vice Chairman Bob Lutz. Despite the fact that "We're making enormous progress," he told TCC, "It's one of the areas of huge focus." And it's an area where Lutz says blame should be spread around. GM is willing to spend the money it takes to get world-class interiors, he asserted, but Lutz insisted the giant automaker is not always getting what it's paying for. High-line materials and finishes shown in prototype parts do not necessarily materialize when the same interior components are delivered to the assembly line, he lamented. "This is not a threat. It is a promise," Lutz growled. "If we can't get it from American suppliers, we will find other solutions." -Paul A. Eisenstein
http://www.thecarconnection.com/inde...&sid=173&n=156
Suppliers Get Warned by Lutz
While recent additions to the General Motors lineup have been winning praise from critics and consumers alike, skeptics continue to fault lackluster interior design as the automaker's Achilles heel. You won't get more than a token argument from GM Vice Chairman Bob Lutz. Despite the fact that "We're making enormous progress," he told TCC, "It's one of the areas of huge focus." And it's an area where Lutz says blame should be spread around. GM is willing to spend the money it takes to get world-class interiors, he asserted, but Lutz insisted the giant automaker is not always getting what it's paying for. High-line materials and finishes shown in prototype parts do not necessarily materialize when the same interior components are delivered to the assembly line, he lamented. "This is not a threat. It is a promise," Lutz growled. "If we can't get it from American suppliers, we will find other solutions." -Paul A. Eisenstein
However...all is not lost here....there seems to be some genuine progress in the latest Ford F-150 and Cadillac XLR interiors.
08-03-04, 12:49 PM
#6
Lexus Test Driver
Lutz rocks, always fun to read about.
OK. Here we go. Anyone in Tier 1 auto? If so, you know the "standard" from the big 3 is for the suppliers to lower their price 5% every year or whatever the term of the contract is on that part. So wages go up, health insurance goes up, everything is going up, buy every year the big 3 want a 5% price reduction....
And they are relentless about it!!
Suppliers need the business so at first they take the hard route and say no, then someone else will make the bid and take the business so they have no other choice but to "try" to neg a better deal or just go with the flow.
They go with the flow and now they have to keep cutting back on things, and this includes the quality of worker. Paying for "good" people is no longer an option, you take what you can get.....
For some reason the Big 3 think that suppliers should make zero profit, I mean they are in business to break even right? The big 3 calculation.... Well your paying X amount of dollars for raw material so based on this calculation you should be able to give us this price! Huh???? Yeah a price that leaves little or no room for error and or no profit at all!!!
The big 3 treat their suppliers like crap and that's a mistake that is haunting them now. Wait until someone like Lear or Magna says well we don't want to bid on this part anymore, we are booked with China business............
The sad part the Big 3 are so inefficient, even today I hear of friends and family talk about how they worked 35 hours of OT last week and slept on the job, of even in the office people working 20-30 hours a week of OT beyond their 105k salary and they cannot even tell you what they do. So the only way the big 3 can think of lowering their cost is beating up on the suppliers all the time. And you wonder why they send you bad parts.......................
OK. Here we go. Anyone in Tier 1 auto? If so, you know the "standard" from the big 3 is for the suppliers to lower their price 5% every year or whatever the term of the contract is on that part. So wages go up, health insurance goes up, everything is going up, buy every year the big 3 want a 5% price reduction....
And they are relentless about it!!
Suppliers need the business so at first they take the hard route and say no, then someone else will make the bid and take the business so they have no other choice but to "try" to neg a better deal or just go with the flow.
They go with the flow and now they have to keep cutting back on things, and this includes the quality of worker. Paying for "good" people is no longer an option, you take what you can get.....
For some reason the Big 3 think that suppliers should make zero profit, I mean they are in business to break even right? The big 3 calculation.... Well your paying X amount of dollars for raw material so based on this calculation you should be able to give us this price! Huh???? Yeah a price that leaves little or no room for error and or no profit at all!!!
The big 3 treat their suppliers like crap and that's a mistake that is haunting them now. Wait until someone like Lear or Magna says well we don't want to bid on this part anymore, we are booked with China business............
The sad part the Big 3 are so inefficient, even today I hear of friends and family talk about how they worked 35 hours of OT last week and slept on the job, of even in the office people working 20-30 hours a week of OT beyond their 105k salary and they cannot even tell you what they do. So the only way the big 3 can think of lowering their cost is beating up on the suppliers all the time. And you wonder why they send you bad parts.......................
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