Production pressures may mean suppliers will catch a break


"Hello, I'm from General Motors and I'm here to help you!"

We've heard that line before with respect to government bureaucracy. Now it seems that GM has sent a letter to several of its suppliers offering to help identify waste, forecast costs, and look for other ways to reduce costs. That was according to a recent editorial in IHS SupplierBusiness, which noted that "after several years of profitability being largely attributable to increasing transaction prices, GM has shifted to a program aimed at driving cost out of the systems and stepping toward working more closely with suppliers to jointly find and eliminate inefficiencies and reduce costs."

This may not be as altruistic a position as it seems. Over the years, some suppliers have learned that whenever the automotive OEMs want to help them reduce costs and eliminate waste, it usually means they want a price reduction. That's why there is a reluctance on the part of many mold manufacturers and molders to divulge certain cost-saving design measures such as more optimum cooling to get better cycle times, or other technology that might allow the mold makers and/or the molders to make a few percent more profit.

One automotive supplier once told me, "If I tell them that I'm designing a mold to run faster cycle times, they'll want a bigger rebate. These guys don't want you to realize any profit at all." In other words, any money that suppliers manage to save will likely go to the OEMs' bottom lines, not to the suppliers.

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