The showdown between suppliers and DaimlerChrysler Corp. earlier this year over a 5% price cut was blown out of proportion, a top executive at ArvinMeritor Inc. says during a tour of the company's newly expanded steel wheels facility in San Luis Potosi, Mexico.
“We face customer requests for price reductions for every product we make with every customer every year. I'm frankly surprised this one has gotten so much publicity,” says Terry O'Rourke, president of ArvinMeritor's Light Vehicle Systems unit. “It is a way of doing business in our industry and has been for several years. If a customer is in trouble, we always want to try to help. If they cannot sell a vehicle we sell nothing.”
In December, DCC announced its 5% price cut on parts prior to privately negotiating with suppliers, and many large parts-makers joined forces against DCC's demands. DCC originally took a non-negotiating position on the price cut, but deals have been brokered. “They got their cut. We got some things in return,” he says, without giving details.
Despite the perceived contentious period earlier this year between DCC and the supplier community, Mr. O'Rourke says relations are fine with the Auburn Hills, MI-based automaker.
ArvinMeritor's 89,000-sq.-ft. expansion (8,268 sq.-m) in San Luis Potosi increases steel wheel output from 4 million to 6 million units a year.
With the additional space, the plant can build larger, heavier and full-face wheels in addition to stepping up output for the VW Cabrio, PT Cruiser, Dodge Ram and Caravan, Chevy Impala and other vehicles. The workforce will grow from 95 to as much as 500.