Are Car Companies Falling Back Into Bad Habits?

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2013 Toyota Avalon (credit: Toyota Motor Corporation)

2013 Toyota Avalon (credit: Toyota Motor Corporation)

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  autos arrows plug v2 Are Car Companies Falling Back Into Bad Habits?

BIRMINGHAM, MI (WWJ) – The latest study of the relationship between car companies and their suppliers comes with a warning.

“The basic theme this year, particularly as it related to the domestics, is ‘They’ve forgotten what we did with them in the 2008-2010 time period, when they needed our help, and they are reverting back to their old tricks,” says John Henke, President of Planning Perspectives and an Oakland University Business Professor.

Every year Planning Perspectives surveys suppliers about the relationship with the three domestic car companies, and the three Japanese carmakers that have factories in the U.S.


Interview: Jeff Gilbert talks with study author John Henke.

The overall study is pretty stable this year, and there’s not much difference in the scores of the major auto companies. But, Henke says, suppliers are reporting more pressure for price concessions, and more pressure to make rapid changes in products.

Henke says what’s different now is this type of pressure is coming from all major automakers, not just the domestics, as had been the case several years ago. He says Japanese carmakers have started using the same pressure techniques on suppliers that domestic companies have historically used.

While the leaders of major auto companies have made it a goal to improve relations with suppliers, Henke says often that goal doesn’t reach those who are in direct contact with suppliers.

Car companies have made progress setting the agenda for better supplier relations, Henke says, but now have to hone in on the follow through. “They’ve got to step back and decide what they really want to do, start implementing a plan, and start sticking to it.”

Toyota remains the company that suppliers most want to do business with, and Ford tops the domestics. But, Henke says there’s no longer a wide range of difference between Toyota on the top and Chrysler on the bottom.

These finding are important, Henke says, because suppliers often save their best products for the companies that they have the best relationship with.

That, he says, is the main reason why companies can’t let up in efforts to improve and sustain good supplier relations.

“Everybody’s making lots of money, ‘Why do we have to worry about it, we’re making lots of money?’ Well, because you saw just a few years ago, what happens when you don’t make a lot of money,” Henke says.

Written by Jeff Gilbert. Connect with Jeff at jdgilbert@cbs.comfacebook.com/carchronicles and @jefferygilbert.

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