If you're among the many automotive suppliers who recently received requests for retroactive rebates, here's a suggestion: Go to the dealership where you bought your car and ask for a 3 percent rebate. Emphasize that it's strictly voluntary, but threaten that if the dealer doesn't fork over a check, you'll buy your next car from someone else.
If you're lucky, the dealer won't call the cops. More likely the entire sales department will have a good laugh at your expense.
This rebate concept could be funny. But the way it's being presented by Lear Corp. and Visteon Automotive Systems, it's too offensive to be humorous.
Both companies recently sent letters to their suppliers asking for rebates on orders placed or shipped in 1999. The size of the rebates vary from 3-5 percent.
Their targets are many of our readers: Tier 2 part suppliers, toolmakers and machinery companies. Lear and Visteon say they need the rebates to be more competitive.
We urge suppliers to hold the line and reject this shakedown. Many will, no doubt.
But some will weigh the issue and decide that the risk of lost business is too great, or that the promise of increased revenue is too lucrative. They'll choose to pay the rebates. Or they'll open their books to the suppliers and negotiate other terms.
Even if only a few suppliers actually pay the rebates, the fact that Lear and Visteon even requested them will have an impact. In effect, it puts suppliers on the defensive. They can forget about trying to raise prices in 2000 — or even passing through increases in their raw material prices.
Despite all the talk of partnerships and having good relations with suppliers, we recognize that business isn't a church picnic. Things get nasty sometimes, and successful companies often get that way by crawling over their adversaries, their suppliers and even their customers.
But typical plastics processors and toolmakers can't win in this sort of negotiation. They're small companies that don't have a lot of leverage when they deal with much larger customers.
If this is a trend, it won't instill much trust or goodwill in the hearts of established Lear and Visteon suppliers.
No doubt the newly empowered Tier 1 suppliers learned this negotiating trick from hard-bargaining automakers, who know a thing or two about beating up suppliers.
If so, then we know from experience that Tier 1 suppliers who resist the temptation to jump on the rebate bandwagon will, by contrast, gain in reputation in the eyes of their Tier 2 suppliers. That has certainly been the case with automakers: In the past decade, suppliers have cast General Motors Corp. as an evil demon, Chrysler Corp. as a model citizen and Ford Motor Co. as something in the middle.
If you were a Tier 1 supplier, who would you rather emulate?