DETROIT - Rising oil prices not only hurt General Motors' sales of trucks, but they also make it more expensive to buy parts and ship vehicles.
GM purchasing chief Bo Andersson said last week that each $1-a-barrel increase in oil prices means a $4 million increase in purchasing costs for the company's North American operations. GM's supply base also is grappling with higher prices for aluminum, steel and resins.
"All of these costs are escalating within our supply base," Andersson told reporters after a speech at a Federal Reserve Bank conference in Detroit. Andersson, GM's vice president of global purchasing and supply chain, oversees the automaker's $85 billion annual global parts budget.
Oil prices set a record last week, topping $72 a barrel. They have risen about $12 a barrel over the past two months.
High oil prices - and the higher gasoline prices that follow - have bedeviled the market for light trucks. SUV sales in the United States dropped 12.5 percent in 2005.
Higher fuel prices also reverberate throughout the automakers' supply chains. For example, it costs more to truck parts to the assembly line and to ship vehicles to dealers.
Two of North America's largest car haulers, Allied Holdings Inc. and PTS Inc., are in Chapter 11 reorganization. They account for a combined 60 percent market share in the business. Both companies have been hurt by rising fuel prices and high labor costs.
In prepared remarks, Andersson discussed GM's supplier relations and conceded that problems have existed. "We have had suppliers angry at us for 12 years," he said.
But Andersson also described how GM has improved relations with suppliers such as Denso Corp.
"Business growth drives supplier satisfaction," he said. "If you don't grow, things get tough."
Denso has won a variety of new business with GM, including the heating and air-conditioning work on Cadillac platforms and the navigation systems on the GMT900 truck platform.
Denso also is in the running for contracts supplying diesel technology, Andersson said.
Toyota Motor Corp. has a 22.9 percent stake in Denso.
GM spokesman Tom Wickham said, "The relationship between GM and Denso is strong because there's common ground results - we both want improvement."
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