TOLEDO, OHIO — A redesigned vehicle, a re-sourced part, a new supplier plant — it sounds easy enough.
But when it came to sourcing the instrument panel for the redesigned Jeep Wrangler that launched late last year, the solution wasn't so simple.
The move resulted in the closing of a longtime Jeep supplier's plant, the creation of a competitor plant only a stone's throw away and in the end, another case of downward cost pressure that some say is a repeating industry cycle.
"There are always the mandated cost reductions in every contract, but there are also now demands for more on top of those," one Tier 1 supplier CEO told Automotive News, on condition of anonymity to protect the relationship with the supplier's customers. "I would say that all the OEMs have reverted to their old, bad habits when it comes to cost reductions."
Suppliers say pricing pressure from automakers never goes away, and lately has increased as automakers struggle to boost financial performance as vehicles become more complex and consumers show an unwillingness to pay for that complexity.
For more than 200 workers at Toledo Molding & Die Inc., the Ohio producer of the JK Wrangler's instrument panel for 12 years, the end of their jobs was announced in a notice the company had to file with the state:
"This plant is closing as a result of Fiat Chrysler Automobiles' decision to award the next generation Jeep Wrangler production of the instrument panel assembly to Detroit Manufacturing Systems," it read.