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Chrysler lays out a perilous course with suppliers

It was celebrated within the auto industry. It was the stuff of textbooks outside. Now, the old Chrysler Corp. purchasing strategy of the 1990s is dead.

If that wasn't clear before, it became clear this month. First, the Chrysler group laid out the changes in a private meeting with its U.S. suppliers. Then, in a speech at an industry forum, COO Wolfgang Bernhard spelled out clearly an end to the old ways: The era of partnership is over. No longer will we favor incumbent suppliers automatically. We need the best technology at the lowest price, and we need it now. Our business will go to the suppliers who can deliver.

This is Bernhard's ship, of course, and he is free to steer it as he will. But if he's counting on suppliers to get him out of his company's financial mess, he is in danger of a shipwreck. This is not the way to get suppliers' best technology.

Of course, suppliers want business. But they need more than that. They need assurance that their investment will be paid back. They need some hope of a long-term relationship. Most important, they need to know that DaimlerChrysler won't take their ideas and shop them around to other bidders.

If suppliers don't trust DaimlerChrysler, DaimlerChrysler won't get their best ideas. And it's clear that suppliers don't trust the message they have heard this month.

Bernhard is right to fix a system that isn't working anymore. But as he charts DaimlerChrysler's recovery, he would do well to survey the competition. As Nissan Motor Corp. began its miraculous rise from the financial pits two years ago, it invited suppliers to get creative and find ways to make Nissan better. Help us, Nissan said, and we'll all share the rewards. If Nissan's record profit of last year is any indication, the strategy worked quite well.

You can reach Keith Crain at kcrain@crain.com

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