Suppliers: GM better, rivals not

General Motors Corp. has substantially improved its rocky relationship with parts suppliers for the first time in 15 years, while the rapport has worsened at Ford Motor Co. and Chrysler, according to a study to be released today.

GM's improvement suggests the automaker's aggressive plan to work more harmoniously with its parts makers is gaining traction.

Despite the improvement by GM, North American auto suppliers have far better relations with Asian automakers, according to the annual study by Planning Perspectives Inc., an automotive consultancy in Birmingham.

In recent years, Detroit's automakers have sharply reduced production while pressuring suppliers to reduce prices, pushing some parts makers into bankruptcy or to the brink of it.

The tough times have taken a toll. For example, 82 percent of suppliers consider Toyota a preferred or very preferred customer, compared to 10 percent for Ford, which has the worst supplier relations, according to the survey.

Adversarial supplier relationships can hamstring an automaker in a number of ways.

Suppliers tend to offer their best technology and highest quality parts to the best customers, Henke said. Suppliers said price concessions given to Detroit's automakers sapped spending on research and development, while prices paid by Honda and Toyota let them put more into R&D.

Planning Perspectives surveyed 308 suppliers from mid-April to mid-May that represent about half the annual North American parts sales to six major automakers: GM, Ford and the Chrysler Group, along with Japan's Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.

On a scale of zero to 500 -- with zero being the worst -- the survey rated GM's overall relations with its suppliers at 174, up from 131 last year. "We've never seen that type of improvement before," said John Henke, president of Planning Perspectives. "They've just generally been doing things better from the standpoint of working with their suppliers."

As they have since the report began in 2001, the suppliers ranked Toyota and Honda the best companies with which to work.

Of the six companies ranked, Toyota had the best relations with suppliers with a score of 415, followed by Honda (380), Nissan (289), Chrysler (199), GM (174) and Ford (162). Ford and Chrysler fell several points from last year.

Henke called a Ford program to improve supplier relations a "disappointing failure."

"This is unfortunate because Ford more than ever is dependent on the support of its suppliers to help in its turnaround," he said.@@page@@

GM's mission to improve its supplier relationships started in 2005. At the time, GM's dealings with parts makers had reached a boiling point. Bo Andersson, GM's vice president of purchasing and supply chain, had described meetings in which angry suppliers shouted at him and even grabbed at his tie.

GM has just wrapped up a three-year initiative to cut its $85 billion global purchasing bill 20 percent, and the automaker was looking for more reductions.

"GM had literally gone off the map in terms of how bad the relationship was," Henke said.

Changes big and small have begun to reduce the rancor. For example, GM assigns an executive level employee to work daily with its largest suppliers. Andersson holds six meetings a year with suppliers, two in person and four over the Internet. The automaker has created two supplier councils, in which companies can provide feedback to GM.

A new mandate prohibits engineering changes to vehicles within 90 days of their launch. Such last-minute tweaks are costly and time-consuming for parts makers.

"We're really pleased with what we think is a very dramatic improvement," said GM spokeswoman Deb Silverman. "It's the result of a couple years of very hard work. There's still work to be done."

As the largest automaker, GM can make or break many of its suppliers. "GM is over 75 percent of our business -- we do what we need to do," said Renee Rogers, spokeswoman for American Axle & Manufacturing Holdings Inc. in Detroit.

She said the company's relationship with GM is good. "We're dealing with things we can control and meeting their requirements as we need to," she said.

Despite improvements, suppliers say they generally don't trust GM, according to the report. Ford and Chrysler also rated low in the trust category.

While foreign automakers have improved their supplier relationships over the past four years, with only slight variations, it appears that progress is slowing.

"Part of it is a matter of low-hanging fruit," said Toyota spokesman Dan Sieger. "When you're doing well in something, improving is more challenging. But there's a plateau, there's never good enough."

Ford and Chrysler representatives said they couldn't comment on the report because they haven't seen it, but stressed that supplier relationships are a priority.

"We have an open dialogue with them," said Ford spokeswoman Becky Sanch. "You can't introduce a program and expect the issues you've been facing are going to disappear overnight."