Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
      • 2022 class
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
February 11, 2002 01:00 AM

Automakers recognizing needs of their suppliers

Rhoda Miel
Managing Editor
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    As North American automakers stumble their way from years of record-setting sales to the reality of recession, they are taking note of where the fallout has left their suppliers and at least considering new relationships with them.

    Rather than slashing prices, they say they are willing to share savings to help smaller companies benefit from production improvements. It is more than just public relations, industry watchers say: They have no choice.

    J Ferron, automotive partner with PricewaterhouseCoopers' consulting group, described the current business model simply as ``dead man walking.''

    Look at the facts, added David Stockman, founding partner of Heartland Industrial Partners of Greenwich, Conn., the investment group that is majority owner of Collins & Aikman Corp. Since 1999, while the North American auto industry has set records for sales of more than 17 million vehicles a year, 13 top suppliers have filed for bankruptcy. Banks and creditors have recorded $8 billion in losses to troubled operations.

    ``You have to recognize that what went on is a nonviable course,'' Stockman said during the Automotive News World Congress, held Jan. 14-16 in Dearborn. ``Depleting the capital from the supply base will lead to huge problems in quality, in delivery and in cost on down the road. We need longer-term vision.''

    Even as Ford Motor Co. on Jan. 11 announced cutbacks that will shed 35,000 jobs, it took note of its need for aid from the supplier base. Ford launched a one-year plan to let suppliers keep 35 percent of the savings from proposals that save it money.

    ``The idea is to further improve the working relationships with suppliers and, in turn, encourage them to come up with ideas that are beneficial to them and beneficial to Ford,'' said Ford spokesman Frank Sopata.

    Detroit-based General Motors Corp. launched its own sharing program in late 2000. Tom Stallkamp, who created the concept during his tenure at Chrysler Corp. - now part of DaimlerChrysler AG - credits suppliers with helping to save that company twice in its history.

    ``Suppliers really can think for themselves, and it's encouraging to see the [automakers] realize that,'' said Stallkamp, who now is vice president and chief executive officer of auto consulting and personnel supplier MSX International Inc. in Auburn Hills, Mich.

    Ford, along with the rest of the industry, has not been shy about price cuts in the past, said supplier consultant Jeff Mengel, a partner with Plante & Moran LLP of Auburn Hills. But now, there are too many suppliers in trouble.

    ``They have been fairly aggressive over the years, but they simply could not go into it with the same [response] this time,'' he said. ``Whether you think of it as the way the game is played, there are some suppliers who are in a very tough situation.''

    Ford's restructuring plan will cut deep within its own ranks, with the closing of three assembly plants. It also will close metal processing operations in Cleveland and Dearborn and drop four models and slow production by nearly 1 million vehicles annually.

    But Ford also plans to roll out 20 new or revamped products by mid-decade, and that requires fresh ideas from throughout the industry. That means not only sharing savings, but also providing long-term contracts that allow companies to plan their costs and focus on production and capacity.

    Even large suppliers are working more closely with their supplier bases. Visteon Corp. of Dearborn has launched a sharing program called Suppliers and Visteon Excel.

    Despite the partnership claims, smaller firms will suffer the most from cutbacks. They do not have the capital access of larger-scale customers. When an automaker delays a product launch, molders are left with the expenditures they put in to meet the expected ramp-up with no product going out nor income coming in, Mengel said. Those costs filter further down the supply chain as the carmakers share design responsibilities through the tier structure. That means more companies will shut down before the business cycle shakes itself out.

    RECOMMENDED FOR YOU
    Salona buys molder DaMar Plastics, has deal for another acquisition in hand
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    DOJ files criminal charges against ABC Polymer over worker death
    2
    Pregis to close Kentucky sheet foam plant, blames lack of material
    3
    Challenges persist in resin distribution
    4
    Charter Next Generation buys Ohio films business
    5
    Auto suppliers asking for contract relief
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
          • 2022 class
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified