The Power of NO in Running a Business

According to a recent editorial in IHS SupplierBusiness, North American suppliers "are wielding more negotiating power in their dealings with automakers in 2013 than perhaps at any time since the dawn of the auto industry." The main reason, noted the editorial, is that major suppliers (Tier 1s) came through the recession with a "much-reduced dependence on low-margin commodity products." This got passed down to lower-tier suppliers "where they are hidden from the OEMs, and are less susceptible to price pressure."

Another interesting statement in this editorial noted that parts makers "are standing their ground on prices and discarding the past practice of filling an automaker's order even it if meant losing money on the contract." It cites a recent "TRW-General Motors dust-up" as one example.

"Suppliers have changed their business model over the past 10 years . . ." — gee, you think? After watching the adversarial practices of the automotive industry that put so many suppliers out of business or forced mergers and acquisitions in order to be financially strong enough to stand up to the big OEMs, I'm sure they felt a change in their business model was in order.

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