Chrysler Tells Its American Suppliers to Leave the U.S.

Edward Niedermeyer
by Edward Niedermeyer
chrysler tells its american suppliers to leave the u s

Chrysler's told its suppliers to cut their prices by 25 percent and get the Hell out of Dodge. ChryCo Purchasing Czar John Campi unveiled his employer's latest supplier initiative to hundreds of Chrysler suppliers. Here the deal [via Automotive News, sub]… ChryCo promises to give its suppliers 30 days' notice of its production schedule (rather than seven), share more parts among nameplates, and reduce late engineering changes. Suppliers will split the savings with Chrysler– unless they fail to reduce component costs by 25 percent. If not, they'll have to cut prices and eat the loss. (The 25 percent reduction benchmark applies to parts both old and new.) With "the vast majority" of Chrysler components coming from America, Campi is encouraging suppliers to move operations overseas to facilitate the costs. Holy shit! It's bad enough that Chrysler's driving itself into the ground, but owners Cerberus seem hell-bent on taking its entire American supply chain down with it. You can't squeeze blood from a stone; with the price of nearly every raw material rising, Chrysler's audacious cost-cutting will only yield more bankruptcies. And lower quality products. And American job losses. This will not make Chrysler any friends when it hits the bankruptcy buffers, nor should it.

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  • Rix Rix on May 19, 2008

    I want to say something sarcastic about Chrysler quality. But there's nothing left to say. Cerberus isn't big enough to wield a stick. Suppliers will just walk rather than take a loss.

  • Truthbetold37 Truthbetold37 on May 20, 2008

    The irony of sourcing is that the auto companies building cars in the US tell their suppliers to buy more parts outside the US (or they source tier 1 parts outside the US). These parts are shipped on trucks or boats burning millions of gallons of diesel fuel. All the while they tout the fuel economy of their vehicles. No one in the media puts 2 and 2 together.

  • Truthbetold37 Truthbetold37 on May 20, 2008

    I forgot to add.... 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.

  • Jerome10 Jerome10 on May 20, 2008

    Eh, nobody will probably read my post. 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.