It doesn't seem that long ago that Americans in the auto industry were decidedly territorial, swinging sledge hammers at Japanese imports at union rallies and eager to castigate foreign automakers for intruding on U.S. soil.

These sentiments are rarely heard today. Besides creating thousands of jobs for Americans, foreign automakers and suppliers have made U.S. automakers more competitive merely by their presence.

And the earlier fear that foreign-based automakers would source parts only from their domestic suppliers appears to have been unfounded, based on findings of WAW's 22nd annual supplier survey.

Nearly three-quarters of supplier respondents - 74% - say their companies are currently doing business with a Japanese or European automaker in the U.S. Need more proof that the auto industry is truly global?

Globalization was one of many themes explored in this year's supplier survey, a key part of this month's supplier issue.

In 1988, the "threat" of Japanese transplant suppliers was a hot issue. In 1991, it was whether Chrysler paid its bills on time. This year's survey, with 446 automaker and supplier participants, began with questions gauging the overall health of the auto industry and its prospects for the future.

When asked how much longer this period of good financial health will last for the North American auto industry, supplier and OEM participants responded in almost identical proportions: about 31% say two years, 24% say three years and a solid 21% say more than five years.

But talk of a downturn sparks considerable disagreement among our respondents. When asked if their companies are ready for a downturn, perhaps by stockpiling cash, 66% of OEM respondents and only 33% of supplier respondents say "yes." A mere 17% of OEM respondents and an alarming 46% of supplier respondents say their companies are not ready for a downturn.

Do the automakers know something that suppliers don't? Perhaps the OEMs are just better at planning for the future.

Also explored was the truck market boom that has bolstered North America. OEM respondents overwhelmingly (78%) see the continuing switch to light trucks, sport/utility vehicles and car/truck "hybrids" as positive for their companies.

But of supplier respondents, 51% say the switch has been positive and a whopping 40% say it has impacted their companies negatively. Perhaps many suppliers are rooted in product lines that do not interchange easily with both cars and trucks.

Also surprising is the impact of supplier consolidation, which continues at a breakneck pace. A healthy 55% of OEM respondents and a less-reassuring 41% of supplier respondents see consolidation as having positive impacts on their companies. But a disconcerting 28% of supplier respondents and 20% of OEM respondents see this consolidation as negative for their companies.

It's easy for OEMs to reap the benefits of dealing with one supplier instead of two. But suppliers have to sort out the messy details of layoffs and melding operations. The survey suggests that mergers and acquisitions are for the benefit of automakers more than for the suppliers themselves.

Our respondents represented a broad cross-section of the supplier sector. About 40% of supplier respondents work for small companies with annual sales of less than $250 million, 35% work for big suppliers with sales of more than $1 billion, and 20% represent midsize companies in between.

The survey also confirms the prevalence of the modularity trend. For instance, 83% of OEM respondents say their companies are asking suppliers for more complete systems and modules, while 66% of supplier respondents say their OEM customers are requesting those systems.

And like last year, there is disagreement as to whether suppliers recover the cost of developing such systems. Many OEM respondents (49%) say their companies allow suppliers to recover those costs, while 34% of supplier respondents say their companies have been unable to recover those costs.

Many of our respondents may have not been the ideal people to answer such questions - 41% fromboth sides were not sure.

And will it be necessary to have union representation at supplier plants shipping modules to OEMs? Both sides, more so for suppliers, play down the issue. Of the respondents, 52% of suppliers and 47% of OEMs say union representation will not be necessary, but 29% of OEMs and 12% of suppliers say it will be necessary.

And how can we forget e-commerce, the auto industry's newfound tonic? About 60% of respondents from both sides say their companies are using the Internet or the ANX system to complete transactions.

To hear the strategists talk, e-commerce will make the industry much more agile in responding to consumer demands. OEM respondents are considerably more optimistic, as 60% of them, compared to 42% of supplier respondents, say it is likely or very likely that automakers soon will be able to deliver a custom-ordered vehicle to the consumer within five or 10 days of ordering it.

But 57% of supplier respondents, compared to 39% of OEM respondents, say that it is unlikely or not likely at all.

Which automaker makes best use of its suppliers' capabilities? Like last year, when a similar question was asked, DaimlerChrysler Corp. (22.7% of supplier respondents) led the way, followed by Ford Motor Co. (16.2%).

But making significant gains was General Motors Corp., which last year placed fifth with only 4% of supplier respondents. This year, in a survey that is more scientific (see sidebar), GM surpasses Toyota Motor Mfg. and Honda America Mfg. Inc. Nearly 10% of supplier respondents say GM makes the best use of its suppliers' capabilities.

Warranty coverage also has been a hot issue in recent years, as automakers expect suppliers to share in the cost of replacing faulty parts. But the two sides disagree on the fairness of such programs.

Nearly 80% of OEM respondents and only 34% of supplier respondents consider warranty-reduction programs to be generally equitable to both OEM and supplier. But 41% of supplier respondents and only 13% of OEM respondents do not consider such programs to be equitable.

Some timeless questions are worth asking year after year. For instance, 66% of supplier respondents and 52% of OEM respondents say pressure on suppliers to cut prices has increased, and 31% of supplier respondents and 38% of OEM respondents see pricing pressure as remaining constant. Hardly anyone sees that pressure decreasing. Our survey results last year came up with basically the same findings.

And how large are the price cuts this year? Of the supplier respondents, 58% say OEMs are demanding price cuts of between 3% and 6% for year 2000.

Some things never change.

This year's supplier survey is bigger and better than ever. We're sure of it. Past surveys were conducted internally and could only be called opinion polls.

This year, we hired a professional research firm, Intertec Planning and Research, our corporate sibling, to conduct the supplier survey. Respondents were carefully selected from a wide array of WAW readers representing suppliers and all North American automakers, including transplants. Respondents included 216 supplier employees and 230 OEM employees.

The automaker sample, for instance, was based on North American light vehicle production market shares. So General Motors Corp. employees make up 32% of the OEM sample while Volkswagen AG employees make up 2%. All the other automakers fall in between. Big and small suppliers also are represented.

We can now state with confidence that the survey is a more statistically accurate representation of the industry.

Based on past requests, we will make the entire survey, as well as stories analyzing the results, available for free on our website,, beginning in early August.