Plastics part suppliers should watch VW/Audi's new plant in Sao Jose dos Pinhais, Brazil, carefully.
The car assembly plant features an adjacent $37 million, 731/2-acre business park for supplier firms. Suppliers aren't required to locate there, but most do anyway. They find the proximity is necessary to meet Volkswagen AG's super-strict, just-in-time delivery needs.
The operation is a refinement of VW's Resende, Brazil, truck assembly plant, which was the brainchild of its controversial former purchasing chief, Jose Ignacio Lopez de Arriortua. That plant actually has VW and suppliers working under the same roof.
VW says that degree of intimacy isn't possible in Sao Jose dos Pinhais, because cars are more complicated to assemble than trucks.
Already, the new plant is raising questions about suppliers' relationship with VW. Is the automaker obligated to generate more work for suppliers that came to the park based on aggressive business projections that now, obviously, won't happen? Must all suppliers in the park follow the same union-labor arrangement as the carmaker, in order to keep labor relations smooth?
Many plastics companies, when they hear customers talk about a partnership, think they're about to get stabbed in the back. We're anxious to see if this case is different.