(Jan. 29, 2007) — There is no free lunch in the auto industry. Suppliers, of course, have known that for years, but now that's becoming apparent even to the most spoiled members of the media, who found themselves scrounging for lunch at the North American International Auto Show's preview days, Jan. 7-9.
Automakers once took turns providing a lunch to the thousands of reporters and industry analysts at the Detroit event. Just a few years ago, they'd trot out caterers in white coats slicing roast beef and serving hot meals. Then the hot meals made way for box lunches.
For this year's event the closest thing to an organized meal was celebrity chef Bobby Flay's appearance at DaimlerChrysler Corp.'s launch for its newest minivan.
But even as Flay dished up some pork with mango salsa on stage, no one forgot the realities of the auto industry for a company like DaimlerChrysler, which is struggling to restructure its North American operations.
“I can tell you've been working in some hot kitchens,” Flay quipped to Chrysler President and Chief Executive Officer Tom LaSorda as he watched him frost a chocolate cake during the introduction.
“The kitchen's been pretty hot, let me tell you,” LaSorda said.
Not that anyone should feel sorry for the press, but it is interesting to note that for one of the global auto industry's largest platforms, the glitz and excitement was decidedly toned down.
It even makes sense. After all, North America's traditional Big Three — DaimlerChrysler Corp., Ford Motor Co. and General Motors Corp. — have been cutting jobs and closing plants. They've cut production. They've forced suppliers to reduce prices again and again, to the point that they are now seeing a rising number of companies on their “troubled” suppliers list.
That is a concern, not just to the struggling companies, but throughout the industry. Automakers and healthy suppliers have to devote more time either to nursing sick suppliers back to health, or moving existing business to other firms once suppliers fail, which also adds unexpected costs.
If a carmaker has to move production of interior door trim, for instance, it has to create a backlog of parts to cover the time when the tool is off-line, find another qualified supplier, physically move the tool, then wait while the new molder works out the bugs as the tool is brought on-line in a new machine. In all, transferring a tool can add 10 percent to the part cost.
Small and midsize suppliers, meanwhile, have had to take on additional engineering and product development as their customers downsize in-house capabilities.
“The whole industry is under stress,” said Michael Lord, CEO of Blue Water Automotive Systems Inc. “The trick is not to become distressed.”
With that in mind, maybe a dose of reality is just what the auto show and its watchers needed.
Miel is Plastics News' Detroit-based automotive reporter.