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July 15, 2002 02:00 AM

Big Three's esteem down among suppliers

Rhoda Miel
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    General Motors Corp. has spent nearly two years revamping its former image as a cost-cutting tyrant.

    But auto suppliers say despite the kind words about cooperation and cost-sharing, they are not seeing any substantive changes from the world's biggest automaker at the buying level. Suppliers recently ranked GM as the worst company to do business with of the six largest North American carmakers.

    To be fair, GM did not fare much worse than the other traditional American carmakers, said John Henke, president of Planning Perspectives Inc., the Birmingham, Mich., consulting group that conducted the annual survey. None of the Big Three automakers could match the high marks suppliers gave Toyota Motor Corp. and Honda Motor Co. Ltd.

    Henke said suppliers expected GM to change the way it did business when it named Bo Andersson vice president of worldwide purchasing in 2000.

    ``People were enthusiastic when [Andersson] took over,'' Henke said in a July 10 review of the study in Detroit. ``Suppliers looked at that and said that things were going to change. It's different. Someone's coming in with a new philosophy.''

    Just last year, 261 suppliers responding to the survey gave GM an average score of 2.75 on a scale of 1-5, with five as the highest, when it came to whether they trusted the automaker. That placed GM third among the six largest North American automakers, below Toyota and Honda but above Nissan Motor Co. Ltd.

    But this year - when 279 Tier 1 suppliers responded to the survey - GM's trust level dropped to 2.12, with suppliers stating they had little trust in the company as a customer. By comparison, Ford Motor Co. came in at 2.21, DaimlerChrysler AG at 2.26, Nissan at 2.63, Honda at 3.32 and Toyota at 3.4.

    Suppliers now, Henke said, are not seeing any real change ripple through layers of management that separate policies and plans at the top of the corporate ladder from the buyers who conduct day-to-day business.

    ``The suppliers who had said that things were going to change, that they trusted that things were going to change, are now saying: `Nah. Same old stuff,' '' he said.

    Changes are taking place, but they take time to filter through the ranks, said GM spokeswoman Renee Rashid-Merem. The company also has created new methods of ranking suppliers to winnow out those with poor quality records - moves that could miff companies that do not make the cut.

    GM is not the only automaker taking a hit. DaimlerChrysler, which rivaled Toyota and Honda for trustworthiness in the 1990s, also has dropped dramatically since Thomas Stallkamp - who had led a supplier-friendly purchasing team - left the firm.

    When DaimlerChrysler demanded across-the-board cuts from its suppliers to help recoup losses, its esteem in the industry dropped to the point where it is now the equal of its U.S.-based rivals. But the drop in trust cannot be blamed solely on pricing, Henke said. Everyone expects customers to demand lower costs.

    ``There's absolutely no relationship between how suppliers feel toward manufacturers and the amount of pressure they're receiving to reduce their prices,'' he said. ``We've looked into this in a variety of different industries, and there's zero relationship.

    ``The difference is how you carry out those price reductions.''

    The analysts worry that poor supplier relations affect both quality and the bottom line. Honda and Toyota rank as having efficient assembly plants and making vehicles consumers want. Suppliers also noted that Honda and Toyota consider quality far more important in awarding contracts than do Ford, Chrysler and GM, although all of the firms take both price and quality seriously.

    Good relations between customers and suppliers are not easy to build and will not happen just because of a year or two of promises, Henke said. They rely on an internal, long-term strategy geared at giving the best companies a chance to thrive even as the automakers themselves thrive.

    ``There is absolutely no silver bullet when it comes to dealing with suppliers. This is not going to happen by saying that if we do this, this week, that things are going to change dramatically. That's not going to happen,'' he said. ``It's incredibly complex.''

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