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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (103749)	6/24/2009 11:51:48 PM
From: TH	4 Recommendations Respond to of 110194

GST, I do not know what most people think about this topic or most topics. I agree that the industry is largely the suppliers. I'm not at liberty to discuss everything I hear, but I see a move at Ford to take more control over some critical "activities" that have been the domain of the suppliers ever since "Ford 2000" a decade and half ago. "Ford 2000", among other things, was an effort to shift costs by having suppliers take on larger engineering and design responsibility for components and sub-systems in Ford vehicles. I recall the notices at the then called Body Engineering offering 24 months of salary to engineers that elected to leave. I know that many that took the 24 months and began work the next day at major suppliers for more pay. I wish I could say more, but the best run of the "little three" has a plan and is taking much greater control for the design, engineering, and sourcing for SOME of the key parts and systems. I see three forward thinking advantages to this approach. First, they will own the technology and control it. As this technology is essential to the branding and marketing of their product, "owning" it allows them to imprint their corporate signature and strengthen the brand(s). Second, if someone goes belly on the supply side, all the technology is not lost and the OE can just transfer the build spec to a new supplier with sufficient capital. Third, they stop the excessive milking for ED&T from key suppliers that now think they are king of technology X and (incorrectly) believe the OE has no choice but to accept their terms. Those suppliers thinking that way are making a big mistake, and I'm already seeing and hearing first-hand plans and actions to strip future business from a key working-partner of the company I work for. I've told this partner company that there is a bulls-eye painted on them, but their arrogance is preventing them from objectively ascertaining the risk. I think their number two has finally got the message, but I think the CEO still believes they are immune to such risk. He is mistaken. I have been predicting the next round of supplier bankruptcies will start in August. Any with a majority of their business with GM and/or Chrysler are going to have serious cash flow issues as the "9" week GM shutdown drags on. And I also predict that starting up again may take a bit longer than expected, as it only takes one missing part from thousands to stop production. I know this pressure first-hand, as I am involved daily with planning for a supplier that will end production in Sept. That document is 14 pages long, single spaced, with a separate effected part on each line. An absolute nightmare for everyone involved. My life sucks right now and I'm getting tremendous pressure from every level to find solutions. GT TH