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 Motor North America Inc., at a Federal Reserve Bank of Chicago conference in Detroit on Tuesday, April 18.
Fifteen of Toyota's suppliers are in Chapter 11 reorganization, Cuneo said.
"We're in a vicious circle," he said. "We need to regenerate trust."
Toyota has tried to pursue collaboration in its relations with suppliers, Cuneo said at the conference, titled "The New Geography of Auto Production."
The Toyota executive has been in charge of plant selection for many of Toyota's North American factories.
Cuneo praised recent efforts by General Motors and Ford Motor Co. to improve relations with suppliers by working more collaboratively.
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. 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," Cuneo said. "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."
You may e-mail Bradford Wernle at [email protected]