Anyway, this is NOT a Chrysler or domestic auto company issue. Supplier I work for is getting the same requests from our transplant customers.

Its gonna get U-G-L-Y.

The Purchasing Executives will tell you that low cost country sourcing is a tool to beat down the local suppliers. However when a part is labor intensive, the local source cannot beat the price of the Chinese/Mexican/Other supplier. Ever.

All the while they tout the fuel economy of their vehicles.

No one in the media puts 2 and 2 together.

Cerberus isn’t big enough to wield a stick. Suppliers will just walk rather than take a loss.

“If you are a supplier and you cant make the product at the cost the manufacturer has asked,you find someone somewhere who will,OR THEY WILL!”

Yeah, that’ll work. There are manufacturing companies making complex 6sigma quality assemblies for nearly free under every rock…

The OEM I work for tried something similar to this a few years back. It must have looked great in the power point, and the MBAs involved no doubt patted themselves on the back while recording the paper savings in their management tools – but back in the real world it was a total disaster.

Just getting your engineering systems compatible with a new supplier can be a huge undertaking. Manufacturing standards, CAE programs, and tolerance methods, can take many months to sort out and implement. We wound up with delayed launches, product recalls, a new supplier going bankrupt because they couldn’t afford to expand to meet the volume commitments they made, etc, etc, etc,. Basically, a total nightmare.

On the good side, the company learned its lesson and has a much more insightful and supplier friendly system in place now. Sadly, in the traditional corporate manner, the executive who really pushed the hard core “tough on suppliers” program through, was promoted for the cost savings while it was still on paper, took a big bonus, then used his new lofty position to blame the eventual failures on the engineers and managers he left behind to implement an unsolvable mess.

Nor money.

Why yes of course….his money.

I’d like to see the gun that Chrysler thinks they have pressed against the temples of their vendors’ skulls. I think the vendors are going to tell Chrysler to stick this “plan” where the sun-don’t-shine. How in the hell do they think they can force a vendor to take a loss, especially in the light of knowing that there is no relief in the short or long term.

Sometimes, the customer is wrong.

Handouts are inevitable for GM and Ford, maybe not Chrysler. It is just different enough, just small enough, just crappy enough to be made an example of. Convince both the public and the remaining two automakers that there is moral hazard with respect to performing incompetently.

I think Daimler purged Chrysler of it’s most imaginative execs, and robbed them of the means to mount any sort of product based comeback. Pity. The company has added untold billions to the economies of the US and Canada since the loan guarantees.

They lost money too, and market share, along with 210 million dollars. Bob was the worse thing to hit HD ever.

Frankly it’s their money to build what they think customers want to buy. I personally would not care for a car with a windmill on top – nor would Ted Kennedy in Nantucket. ;)

Too bad that they own Jeep.

oh, wait, nevermind…

http://forums.industryweek.com/showthread.php?t=1544

Nor money.

To be fair, Home Depot did make a ton of cash under Nardelli. I think he doubled sales and more than doubled income during his time there. The stock price just never reflected it.

Just sayin.

Chrysler’s 25% savings goal is the same kind of edict you hear from any kind of poorly run purchasing dept from time to time. 25% cost reductions during the most inflationary time in decades? I’m sure your suppliers will get right on board.

A few points:
- Most OE supplier are cracking out the champagne at a 5-point margin (go to NYSE: BWA, pull down some financials, and do the math for one of the most successful parts makers of recent times).
- Every conceivable input cost is going up; the most basic of inputs, steel, is at stratospheric levels and shows no sign of reversing direction any time soon. Let’s not even talk about petrochemical-based inputs.
- Suppliers do not necessarily cost in Chrysler’s organizational inefficiencies up front, therefore it is naive to assume that if the Chrysler folks run their business “normally”, all sorts of savings are going to flow to the suppliers’ bottom lines.
- The bloom is off the rose on many LCC (Low Cost Country) initiatives, with many Tier II/III quotes from offshore now exceeding domestic pricing.

I understand Mr. Campi has a job to do at Chrysler,and it is true that Mr. Andersson’s consistent and relentless policies have driven cost out of GM over that last number of years. However, Mr. Campi is late to the game and in many cases the cupboard is bare on the supplier side. It just isn’t as simple as mandating a 25% decrease in today’s environment.