Nissan vows to turn a new leaf with suppliers

Detroit — Nissan is vowing to mend its ways with North American parts suppliers, following a year of criticism that it is pushing too hard for price reductions.

Speaking to an audience of more than 500 supplier-industry representatives here on Wednesday, Nov. 2, a Nissan North America executive said the automaker will begin a new effort at cooperation, and begin working with parts companies earlier on vehicle programs.

"As a team, we want to be more collaborative upstream," said Chris Reed, vice president of component engineering at Nissan Technical Center North America in Farmington Hills, Mich.

He addressed Nissan's supply-chain reputation on stage at the annual conference held by the Original Equipment Suppliers Association.

"We've alienated ourselves a little bit."

He said that projects require a balance between "cost optimization" and customer value, and Nissan has tilted too far over to cost optimization.

Reed said he could not yet be specific about what steps the company will take to improve supplier relations. But he said he met two weeks ago with Nissan North America's vice president of purchasing, Hiroki Hasegawa, to outline a plan. Reed said the two supplier-facing operations — Hasegawa is based in Nissan North America's headquarters in Nashville — hope to have clear plans on how to mend fences in the next six months.

"Nissan in its relationship with the supply chain is somewhat challenged," OESA CEO Julie Fream said to Reed during his comments to the audience.

Reed readily agreed and acknowledged disappointing supplier surveys that have come out this year. Nissan has gotten an earful from both OESA's 430 member companies and from the North American Automotive OEM-Supplier Working Relations Index Study, published annually by Planning Perspectives Inc.

On the Working Relations index, Nissan sank to the bottom among North America's big automakers in supplier relations this year -- with surveyed parts companies blaming Nissan's cost-cutting demands for the worsening mood.

Reed said that earlier collaboration should help Nissan steer clear of pricing conflicts. He said that by bringing suppliers into the planning too late, the automaker has often already locked into hard cost targets, and that suppliers looking at such cost targets might be limited in what they can give the company.

Nissan has become a mighty player in North American vehicle production. Its multi-product assembly plant in Smyrna, Tenn., is now the largest-volume auto factory on the continent. The plant will turn out 640,000 vehicles this year. Nissan is also the largest automaker in Mexico.

Fream called Reed's on-stage assurances "good news" for the North American supplier community.

"He said that Nissan has gone a little too far over to the cost-optimization side of the equation, and it wants to correct that going forward," Fream said after Reed's comments. "We welcome that."