DETROIT -- The recession and a price surge for raw materials led to better relations between the Detroit 3 and their suppliers -- and to a reappraisal of once-rosy ties between Japanese carmakers and North American suppliers, consultant Kim Korth says.
The remarks from the president of IRN Inc., of Grand Rapids, Mich., came last week at a Society of Automotive Analysts session devoted to commodity prices.
Senior Detroit 3 purchasing executives once thought "someone wins, someone loses" in price negotiations, she said. "Now there's a feeling that if there's not profitability at every level in the chain, sooner or later I get bitten, too." Indeed, in "mid-2007 or so, Chrysler was holding a daily huddle on their distressed suppliers," she said. That led to "an awareness that you need a stable supply base."
A May-June IRN survey found that twice as many suppliers as in 2008 said Chrysler Group was likely to work with them to offset higher commodity prices, Korth said. Those who gave a similar positive review to General Motors Co. "almost doubled," she said.
Respondents also said Ford Motor Co. and Tier 1 suppliers were more likely than they were two years earlier to work with a supplier. But Toyota, Honda and Nissan posted poorer scores than they did in 2008.
The perception used to be that Japanese suppliers "were willing to work with you, but if you look at the details in the contracts, the contracts were more negative" than those with the Detroit 3, Korth said. When suppliers found those contracts left them solely responsible for the burden of soaring commodity costs, their views of Asian automakers soured.