The Chrysler group's forecasted second-quarter operating loss of nearly $1.2 billion will turn up the heat on the automaker's ongoing efforts to reduce parts and material costs.
Chrysler's North American operations have been working since 2000 on a three-year plan to reduce material costs by 15 percent, mostly by improving manufacturing processes and eliminating wasteful practices throughout its supply chain.
David Barnas, the company's purchasing spokesman, says that effort will continue, but there no longer is a specific target. "There is not a new program - just a further intensification of our efforts," he says.
He says that Chrysler will not resort to the unpopular step it took in December 2000, when it demanded an immediate 5 percent price rollback from all suppliers. The move had parts manufacturers howling.
"We won't do that," Barnas says. "But we are still looking for cost reductions and improvements in productivity. Our productivity numbers are nowhere near where Nissan's numbers are. There will be an ongoing effort to get our supplier costs more in line with Nissan's and Honda's."
Against this backdrop, Chrysler said on May 30 that it will have new purchasing chiefs in December. Gary Valade, 60, executive vice president for global procurement and supply, will retire Dec. 16. He will be succeeded by Tom Sidlik, 53, executive vice president of Chrysler procurement and supply.
Peter Rosenfeld, 45, will take over Chrysler group purchasing and supplier quality worldwide. He has been with Chrysler since 1982 and has been Chrysler group vice president for worldwide purchasing and sourcing strategy.
Barnas says Rosenfeld would not be in a position to discuss his plans for Chrysler group purchasing until his new job begins.