When I first started covering plastics suppliers to the auto industry some 20 years ago, suppliers liked to define themselves as makers of modules or systems rather than simply parts. (Or, worst of all, as "providing solutions," a term I still hate because it does absolutely nothing to define what you make.)
They'd say they were a "Tier 0.5 supplier," sitting in a vital space between the automaker and the rest of the supply base.
An element of those claims was true, briefly, before automakers reclaimed some control. But Kurt Nagl from our sister paper Crain's Detroit Business writes that now the opportunity to complete modules is becoming reality.
Carmakers focusing on developing new drivetrains and production for electric vehicles are increasingly relying on suppliers for key parts that aren't dependent on whether a car is powered by electricity or gasoline.
"An automaker typically purchases about 70 percent of a vehicle from suppliers and provides 30 percent of the value in-house," Kurt writes. "Automakers have tightly controlled the supply chain since the Great Recession, which sent them on a survival mission to drive down costs wherever possible. But micromanaging is no longer a viable strategy when speed and innovation are now the keys to survival."
Auto seating supplier Adient plc is just one example of a company finding more freedom.
"Some of our customers have gone fully back and said no, I'm just going to source you the complete system," Adient CEO Doug DelGrosso said. "You'll present us how you're going to source the subcomponents, but I'm ultimately going to leave that decision to you."
