JCI Loses Jeep Seat Contract to India

Jeep Wrangler seats will be sourced from India starting in 2010 because Chrysler LLC pulled the plug on a Johnson Controls Inc. plant in Northwood, OH.

Chrysler declines comment, but a United Auto Workers union official, who represents hourly employees at the affected site as well as the nearby Wrangler assembly plant in Toledo, confirms the move.

Chrysler has “violated the spirit” of the union's ongoing cooperation, says Bruce Baumhower, president of UAW Local 12.

In an extension of a 2001 deal, the union agreed in 2006 to transfer Wrangler seat assembly out of the Wrangler plant. “The tradeoff was the company would bring the suppliers to northwest Ohio, and it would create jobs in our community,” Baumhower tells Ward's.

The new sourcing arrangement also violates the tenets of smart practice, a manufacturing expert says. Shipping SUV seats from India to Ohio shows “total disregard for just-in-time manufacturing,” says Ross Robson, former executive director of the Shingo Prize for Excellence in Manufacturing. “Sequencing, it would seem, is next to impossible.”

The news comes as Chrysler's supplier network appears in a state of flux. Still fresh is the declaration last month by Chairman and CEO Robert Nardelli that the auto maker is “scouring the world” to ensure development of the highest-quality products at the lowest-possible cost.

Chrysler's “aggressive” approach to sourcing should be a signal to under-performing suppliers, warns John Henke, president of Planning Perspectives Inc., which studies supplier relationships. The auto maker appears to be taking a “greenfield” approach because, under its new owners — Cerberus Capital Management LP — it is not beholden to any entity, he says.

While some suppliers may suffer, a new approach to Chrysler's sourcing could prompt others to “start moving much more quickly to get their costs down and get their quality up,” he adds.

So what happened to JCI in Ohio? The supplier refers the question to Chrysler.

Says a Chrysler spokesman: “It should come as no surprise that emerging markets play an increasing role for Chrysler, as well as for our suppliers. Partially driven by our growth strategies in key markets, such as Asia and Europe, Chrysler will work with suppliers in those local markets, as well as in its own backyard to support this growth.”