TRAVERSE CITY, Mich. -- Burned by the Japanese yen and stressed out over natural disasters and fuel costs, Nissan North America has a simple new directive to suppliers: Supply parts closer to Nissan's assembly plants.
The company wants 100 percent of its parts to come from "close by the plant," says Rebecca Vest, Nissan's recently appointed North American purchasing head.
"I've been through enough disasters to know that it's lovely to be able to drive over and pick up your parts," Vest said after addressing suppliers at the 2011 Management Briefing Seminars here on Tuesday.
But Vest, vice president in charge of purchasing for Nissan five North American vehicle and engine plants in Tennessee, Mississippi and Mexico, said the directive is intentionally a bit vague and flexible. For example, Nissan is content to have many of its suppliers in Michigan and the Great Lakes region.
"We're going to look at the total delivered cost to determine your competitiveness," she said. "But generally speaking, a supplier in New York is going to have a tougher time being competitive supplying our plants in Mexico than a supplier who is on the ground in Mexico."
The company's biggest headache is coming from suppliers outside the region.
"The yen is causing me angst every day," she told an industry audience, as she invited suppliers to pitch Nissan on business. "But that's great news for you."
Nissan is on a localization drive, trying to buy parts in North America that are currently made in Japan. The Japanese yen has been trading high against the falling dollar, crimping Nissan's profit on U.S.-made vehicles that import parts from Japan.
The company is shifting new vehicles to North America also, and forecasts producing in North America 85 percent of the vehicles that it sells in North America, up from 69 percent currently.