"So foul and fair a day I have not seen." (Macbeth, Act I, Scene III).
General Motors Corp. suddenly wants to be parts suppliers´ best friend. DaimlerChrysler AG, previously the model of good supplier relations, is reverting to old-school, beat-up-your-suppliers-style management.
Shakespeare himself made a pretty good reputation with stories that weren´t quite as farfetched.
First, let´s look at the bad news. Considering DaimlerChrysler´s stock performance, it is no surprise the company is turning on its would-be partners. DCX was more than $100 a share in January 1999; now it´s less than $50. The trend has been pretty consistent, and not very pretty — and that´s after two of the best years the U.S. auto industry has ever seen.
DaimlerChrysler´s suppliers did not create the problem. The U.S. unit makes some interesting niche products and a very successful minivan. But its effort to make and market competitive midsize cars and trucks is pitiful.
The company´s Supplier Cost Reduction Effort was a model that saved the automaker more than $2 billion annually. Now it´s toast. The SCORE plan´s advocates within DaimlerChrysler are gone, and the company´s new managers are doing their best to pump up the bottom line with a short-term fix.
Case in point: DaimlerChrysler recently demanded price cuts of 15 percent over three years from suppliers to its U.S. division.
DaimlerChrysler will win concessions from some suppliers. But the short-term success will breed resentment. Fighting will replace teamwork, and suppliers quickly will learn to pad bids to leave more room for profit in future years.
That is a lesson that DaimlerChrysler should have learned from GM, previously known as the Big Three´s bad apple. Nearly a decade ago, Jose Ignacio López de Arriortua tried many of the same tricks when he was GM´s head of purchasing. His demands left suppliers with a foul aftertaste that lingered for years.
Now GM is trying to rinse away the final remnants of that López-induced heartburn. GM´s new plan, disclosed in December, offers to share savings with suppliers that come up with, or work with GM on, projects that save money for the automaker.
That sounds a lot like SCORE, and the timing is interesting too. But GM assures suppliers that its newfound strategy has nothing to do with DaimlerChrysler´s contradictory changes.
That may be true, and observers point out that GM actually has been modifying the way it deals with its suppliers for several years. The biggest change now is that GM is putting the change in writing. But if GM had announced this project a year ago, it would have looked like a copy of DaimlerChrysler´s.
If nothing else, GM can thank DaimlerChrysler for a bit of added credibility, and for doing the homework that proves that these types of partnerships can work for all sides.
If only DaimlerChrysler had paid more attention itself.