DaimlerChrysler plans to cut out as many as one-third of its Tier 1 suppliers as it consolidates business with larger, global parts makers, according to a supplier executive familiar with the plan.
DaimlerChrysler Chairman Juergen Schrempp and his top purchasers laid out the plans to more than 300 of the company's main suppliers Friday, Sept. 24, in Frankfurt, Germany.
Vehicle technology will become more important to the North American operations as they seek a competitive edge, said the supplier executive.
He said DaimlerChrysler's European suppliers are cutting costs and closing the price gap that aggressive American suppliers have enjoyed. He expects DaimlerChrysler to 'pick and choose' among suppliers on both sides of the Atlantic.
The company is trying to combine the best elements of supplier programs from the former Chrysler Corp. and the former Daimler-Benz AG, said DaimlerChrysler spokesman Jack Ferry.
Before last November's merger, Chrysler already had intended to shave 300 of its 900 Tier 1 suppliers by 2000.
Chrysler's well-known supplier policies were created by DaimlerChrysler Corp. President Tom Stallkamp, who was left out of last week's DaimlerChrysler reorganization and will leave the company at year end.
Last week's supplier meeting included Schrempp's top U.S. procurement chiefs, Gary Valade and Tom Sidlik, and their German counterparts.
Ferry said the meeting Friday in Frankfurt was 'to lay out the direction of procurement from a global perspective.'
He said the meeting was the first time DaimlerChrysler has been able to meet with its suppliers from both sides of the Atlantic. He said the discussions with suppliers will continue.
The supplier source, who attended the meeting, said winners will be the larger suppliers with global operations.
U.S. and German parts makers with operations on just one continent may become suppliers to the surviving Tier 1 suppliers, he said. Some suppliers will lose work on one project, but gain it on another.