In an exclusive interview last week with Automotive News, GM purchasing chief Grace Lieblein revealed that the company is eliminating controversial portions of the company's standard contract, introduced just six months ago, that had outraged suppliers and was seen as an effort to exert unprecedented control over vendors.
It "was a misstep for sure," Lieblein said. "I don't want to be talking to CEOs about terms and conditions. I want to be talking to them about technology and quality and driving waste from the system."
But she had little choice.
As automakers race to boost fuel economy, improve infotainment and make their cars collision-proof, suppliers of cutting-edge technology feel no particular need to accept unfavorable contracts.
When GM unveiled its revised terms and conditions in July, there was an immediate uproar. Angry suppliers said the contract could saddle them with open-ended liability for parts later deemed unsafe -- even if those parts were made to GM's specifications.
Another stinker was intellectual property rights. Suppliers said GM was not obligated to keep their technical data confidential unless the two parties signed a separate agreement.
Critics said the terms had roots in a long-gone era in which automakers played the tune and suppliers obediently danced.
In the early 1990s, GM purchasing chief Inaki Lopez demanded huge price cuts from suppliers, who feared Lopez would share their technology with rivals if they refused. But now, for several key technologies, a few specialized suppliers control the market.
Airbags are a good example. Five companies -- Takata, Autoliv, TRW, Key Safety Systems and Toyota Gosei -- control the bulk of worldwide sales. If you don't like their prices, you can't order cheap knockoffs from a hole-in-the-wall factory in Shanghai.
So it's no surprise that Takata Corp. is a member of GM's supplier council, an inner circle of 11 companies that spent several months suggesting revisions to GM's terms and conditions.
GM told the council it would assert the right to a supplier's intellectual property only during periods when the vendor is unable to ship products, and that satisfied Robert Fisher, president of Takata's North American subsidiary.
"I think GM gets it," Fisher told Automotive News. "Their behavior will determine which suppliers they attract, and those suppliers will determine what new technology and innovation they get."
The contract dispute has been a trial by fire for Lieblein, who became purchasing chief in December 2012 after her predecessor, Bob Socia, was put in charge of GM China. She had not worked in purchasing but had experience overseeing product launches and manufacturing as president of GM's operations in Brazil and Mexico.
After she revised GM's terms and conditions about six months into her tenure, suppliers complained they had not been consulted and objected to GM's take-it-or-leave-it stance.