The current strategy of auto manufacturers to shift costs and responsibility for the design, development, production, quality and warranty for much of their product to vendors has strained or broken a lot of supplier relationships this decade. It also has, as the recent record of mergers and acquisitions outlined in this issue of Plastics News indicates, predictably rearranged and pruned the supplier landscape.
Much of the talk this week in Detroit at the SAE show will echo that heard last year about what must be done to survive in the new automotive world order established by Detroit's Big Three. The short-term answer is found in the consolidation statistics. Small suppliers can't shoulder the economic and global manufacturing responsibilities that automakers, such as Ford with its 2000 plan, insist vendors assume.
In other industries, the concept employed by the Big Three is an old one. Department stores rely exclusively on suppliers for brand products, including their own. The average department store purchase isn't $20,000, of course, which is about what a new American car costs today. That's the critical problem confronting the Big Three and their suppliers, who Detroit will have to provide with longer-term contracts to justify its cost-shifting.