Tuesday, May 24, 2005

 

"No Place For Amateurs"

So says Tom Walsh about the auto-parts industry in last week's Detroit Free Press, with an excellent article that reviews David Stockman's tenure at Collins & Aikman, and also looks at the problems with Delphi and Visteon. The last paragraph says it all:

No wonder Stockman couldn't make things work at C&A. In an industry with such a cockeyed prevailing culture, it's a wonder that any of these suppliers survive.

How true. Now, I will say that there are suppliers out there (damn few of them) that have learned when to Just Say No, and while this does tend to irritate the OEMs, it's a hell of a lot better alternative than having to come back later with threats like "give us more money or come pick up your tools".

Considering the amount of money flowing through the auto industry for supplied components (roughly 40% of GM's total gross income goes right back out the door to buy parts, and many Tier 1 suppliers find that purchased parts are 60-70% of their total expenditures), it'd be smart for everyone in the business to step back, take a deep breath, and do what's right for the business as a whole. I won't hold my breath for too long on that one - as it is, the daily chokings from customers have already cut off enough blood to everyone's brains.

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