By: David Sedgwick
August 7, 2013
TRAVERSE CITY, MICH. — The auto industry's switch to global platforms will trigger a shakeout of the world's component suppliers.
"Will [global platforms] create pressure for consolidation? The answer is clearly yes," said Scott Kunselman, Chrysler Group's purchasing chief at the seminars on Tuesday.
Chrysler, for example, designed the new Jeep Cherokee on the Fiat's Compact Wide platform, which also underpins the Dodge Dart. Chrysler produces the Cherokee in its Toledo plant, and also is expected to build the compact SUV in China. Meanwhile, Fiat is using the platform for the Viaggio and the 2014 Alfa Romeo Giulia.
Global suppliers are best qualified to produce parts for those vehicles. But it's not clear yet how much Chrysler will shrink its supplier network. The automaker currently has 1,200 parts suppliers, Chrysler said. It expects to have fewer in years to come, but Kunselman's purchasing team is still working out its global strategy to purchase parts.
Ford Motor Co. appears to be further along in its consolidation drive. Birgit Behrendt, the company's vice president of purchasing operations, said Tuesday that the company currently has 1,150 suppliers, and eventually will winnow that number down to 750.
Ford's 104 Tier One suppliers will get more Ford business -- and presumably more profits -- under the company's program for preferred suppliers, dubbed the Aligned Business Framework.
"It is a positive approach," Behrendt said. "The prior approach certainly wasn't working for us, and it wasn't working for our suppliers. There is nothing wrong with being a Tier Two supplier."
Big suppliers are poised to reap the benefits. Staci Kroon, president of Eaton Automotive, said mega-suppliers can meet rising demand for components in one region with extra production from other markets.
"It gives you a buffer between the regions," Kroon said. "We don't have to build maximum production capacity in every region."