DETROIT -- The auto industry will pay dearly if it doesn't move now to repair damaged relations between suppliers and manufacturers.
That message was delivered by Dennis Cuneo, senior vice president of Toyota North America at a Federal Reserve Bank of Chicago conference here Tuesday afternoon. Cuneo said 15 of Toyota's suppliers are in Chapter 11 reorganization.
"We're in a vicious circle," he said. "We need to regenerate trust."
Toyota has tried to pursue a policy of collaboration in its relations with suppliers, Cuneo said at the conference, themed "The New Geography of Auto Production." Cuneo, a veteran Toyota executive, has been in charge of the automaker's plant selection process for many of its North American factories.
Cuneo praised recent efforts by General Motors and Ford Motor Co. to improve relations with suppliers by working more collaboratively.
"Managing the supply chain is the greatest challenge any OEM faces," he said. "The ultimate competition is not between OEMs but between supply chains. The winners will be those that best manage their supply chains."
Cuneo said Toyota knows that working cooperatively with suppliers is essential.
"A cooperative relationship leads to better parts and access by the OEM to the supplier's best technology," he said. "Our goal is to be the customer of choice for suppliers."
Poor communication is the root cause of problems between suppliers and automakers, Cuneo said. To help resolve that, Toyota has set up a department it calls the supplier relations office to act as "an ombudsman for our supply base," he said.
Toyota and other manufacturers must be prepared to deal with suppliers that find themselves in financial distress, Cuneo said. Automakers must work together to help a troubled supplier, he said.
"You worry most about sporadic production interruptions. We have a SWAT team ready to go into the plant if necessary to keep production going."
Nobody benefits from a bankruptcy, he said, except "bankruptcy lawyers and banks."
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