DETROIT — Amid the recall maelstrom, General Motors CEO Mary Barra has also made “building relationships” a key focus of her first nine months in the top job, from dealers to politicians to the media.
But repairing frayed ties with suppliers — a longstanding GM problem — might top the list. Barra told Automotive News last week that GM is “changing the way we do contracts” with suppliers, aiming to make it easier to do business with GM while also leveraging the company’s global scale.
Increasingly, GM is awarding work for multiple generations of a vehicle program. It’s consolidating its supply base by awarding more global contracts, rather than divvying up work market by market. The combination of bigger upfront volumes and longer durations gives GM more scale and provides suppliers better visibility to plan their production capacity, she said.
“That allows them to deploy capital differently, to decide where they’re going to locate, potentially,” Barra said. “It changes the whole relationship, vs. ‘I’m buying 100,000 of these right now, give me your best price on that.’”
The tack reflects GM’s need for deeper ties with its suppliers to access innovation. GM executives have admitted that their historically contentious relationship with suppliers has put the company at a disadvantage as it competes with other automakers for technical know-how in powertrain, autonomous driving, infotainment and other key areas.
The current shift is an acceleration of a strategy put in place about three years ago under then-purchasing chief Bob Socia and continued by Grace Lieblein, who has been in the job since early 2013. Lately, supplier relations has been a pet issue of Lieblein’s boss: global product chief Mark Reuss, who oversees GM’s vast purchasing division.
Despite recent headway, Reuss says a lot of suppliers “really don’t believe in General Motors.”