TRAVERSE CITY, Mich. -- Alarms should sound if a supplier has more than 50 percent of its business with the Big 3.
That's the message from Kim Korth, president of IRN Inc., a consulting firm in Grand Rapids, Mich.
"You have the fiduciary responsibility to your organization to aggressively try to diversify your customer base," Korth said last week at the Management Briefing Seminars.
Korth said the Big 3 and their suppliers have a dysfunctional relationship. While the Big 3 are quick to hit suppliers for price cuts, the Japanese thoroughly review a supplier's methods as partners, not adversaries, she said.
Bu suppliers have choices, Korth said.
"You are already starting to see significant transition in the dependency of your better suppliers to the Japanese, and to a lesser extent, the German manufacturers, and away from the Big 3," Korth said.
"Until the Big 3 OEMs recognize the need to have a healthy and vibrant supply base, there is little hope for the long-term survival of the domestic auto industry. Until the attitude changes, that they increasingly need their vibrant supply base more than the vibrant supply base needs them, there's no hope for significant change in their behavior."
Korth said that she works with suppliers who six and seven years ago were up to 80 percent dependent on General Motors, but today are 50 percent to 60 percent dependent on Japanese automakers.
While it may take repeated attempts to land business with the so-called new domestics - the Japanese and Germans with plants in the United States - these automakers are receptive to new suppliers, Korth said.