U.S. Automakers Still Struggle with Small Suppliers
BY Angus Loten
Facing mounting pressure over offshoring, just 5% of suppliers cited General Motors as preferred partner.
After years of strained relations, U.S. automakers and their large suppliers are starting to get along better -- but the same improvements have not extended to smaller suppliers.
The gains, which were attributed to improved communications, were not shared by smaller suppliers, according to a study by Planning Perspectives, an auto industry consulting firm based in Birmingham, Mich.
In its annual survey of supplier working relations at major U.S. and Japanese automakers, General Motors, Chrysler and Ford all showed improvements over last year, while still ranking far below Toyota, Honda, and Nissan.
But with the exception of Honda, U.S. automakers scored far better among a few large suppliers, than among smaller ones, the survey found.
Of GM's 2,500 suppliers, fewer than 30 are large-scale manufacturers with more than $1 billion in annual sales, according to Planning Perspective's John Henke.
The annual rankings are based on responses by several thousand suppliers asked to gauge their level of trust with an automaker, along with their ability to be open and honest in communications, provide timely information, and to be helpful in reducing costs and improving quality.
Overall, Toyota ranked highest, followed by Honda, Nissan, Chrysler, Ford, and GM. Despite signs of improvement, all three U.S. automakers have scored below the industry mean every year since 2002.
This year, as many as 72% of Toyotas suppliers said they preferred doing business with the automaker, compared to just 5% for GM, where a full 60% said they would "prefer not to do business" them, the survey said.
Last September, GM launched an $85-billion cost-cutting program that set specific savings targets on a per-parts basis, rather than an overall target across all suppliers, as the company has done in the past.
Since 2003, GM has sought to slash purchasing costs by 30%, leading many of its smaller suppliers to complain about mounting pressure to move operations into cheaper markets offshore.
"This emphasis on larger suppliers -- particularly by GM and Ford -- would seem to be in keeping with their previously announced plans to reduce the overall number of their suppliers in favor of fewer larger, more capable global suppliers," Henke said.