Let the Good Times Roll

Talk to purchasing executives such as General Motors Corp.'s Harold R. Kutner, Chrysler Corp.'s Thomas W. Sidlik or Ford Motor Co.'s Carlos E. Mazzorin and you get the impression the good times can roll forever.

Global purchasing in larger volumes than ever, flat or falling commodity prices, even collapsing Asian currencies all are helping to keep auto parts prices under control.

The continuing exodus of mega-suppliers such as AlliedSignal and ITT only add to the giddy optimism. If the big boys can't or don't choose to hack it, someone smaller with more entrepreneurial focus will take their place. There's plenty of capital out there waiting to be invested in the leanest and meanest new team on the block.

Anyway, some of the purchasing czars say they have signed contracts locking in half of their component prices for the next five years. They will be lower then than they are now. Inflation is history.

So what if a key supplier CEO such as Robert Bosch Corp.'s Robert Oswald complains about the burden of carrying engineering costs once borne by the GMs, Fords and Chryslers?

Don't worry when TRW Inc. CEO Joseph Gorman laments about the "increasingly confrontational" environment between automakers and suppliers. Keep those volumes high. We'll all stay rich.

And anyway, says Mr. Sidlik, we at Chrysler have been suppliers' best friend now for years. They save us a buck, they keep 50 cents.

But what happens when the folks from Stuttgart get involved? Sorry, can't talk about that. The Securities and Exchange Commission won't let us.

Well, suppliers aren't dumb. They know how to anticipate change. Just look at Johnson Controls Inc.'s recent acquisition of the Becker Group, which includes the Happich Fibrit interiors unit in Germany.

This year Ward's Auto World chatted with Mssrs. Kutner, Sidlik and Mazzorin about the state of their purchasing strategies. They are major contributors to their companies' improved profitability and firm believers in their abilities to wrest unlimited cost cuts out of their supply chains. Here are excerpts from those interviews, starting with Mr. Kutner.