Insourcing Trend Dead After One Month
Part of the fun of this job: remembering what people said. For example, exactly one month ago, the Detroit Free Press was all about "in-sourcing." "'Due to recent UAW concessions,' [Merrill Lynch automotive analyst] John Murphy wrote in a recent note to investors, 'these tasks [parts design and manufacture] can now be sourced to internal workers at comparable costs and without significant investment in infrastructure… We are convinced that an insourcing trend is emerging.'" Anyone who's been watching the domestics rush to send work abroad– from Chinese-made engines in Chevy's Equinox to Indian programmers taking over Chrysler's IT work— would be forgiven for calling bullshit. And now the Freep's sister paper ( The Detroit News) reports that "Auto suppliers will shoulder a bigger burden of research and development costs as automakers look to shift some of the billions of dollars in costs of developing high-tech features in future vehicles, executives said Monday at SAE International's 2008 World Congress." In fact, our man Don Walker of Magna, friend of the little guys, reckons auto suppliers' share of the carmakers' total R&D spend will jump from 40 to 60 percent by 2012.
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