The Mating Game

If you're expecting to see more automakers getting hitched, you're not alone. About two-thirds of supplier respondents (67%) and 80.6% of OEM respondents say they expect more tieups among major OEMs.

There is less consensus, however, as to whether OEM consolidations are good for suppliers. More than half of OEM participants (55.3%) say that recent deals (DaimlerChrysler, Ford-Volvo, Renault-Nissan) should be positive for suppliers. Among supplier respondents, only 32.1% consider the deals positive, while 46% are unsure.

Any suggested linkups? Our survey participants had many, particularly GM and BMW or Ford and BMW. In fact, our respondents play matchmaker between Ford and two other potential mates: Fiat and Honda. Other suggestions include GM-Isuzu, VW-Fiat, DaimlerChrysler-Fiat, Honda and either BMW or VW and - the biggie - GM-Toyota.

One GM engineer says he expects the unique GM-Toyota relationship to spawn other potential partnerships, "rather than tie-ups."

On the issue of pricing pressure, it's interesting to note that 54.7% of OEM respondents agree that there still is room for suppliers to cut prices while being profitable. Among supplier respondents, however, 46.5% disagree with the statement.

"Their (OEM) profits are at record levels. Ours are declining. Correlation?" asks a supplier purchasing manager.

Other quotes worth sharing from our survey participants: "Yes, the auto industry has broken free of its reputation for economic cyclicality," writes a DaimlerChrysler designer. "We are making so much money on every car and truck sold that we can offer better deals if sales fall off," he says.

"The greatest danger in the next downturn is that cars are a lot better now," writes a Ford technician. "People can weather a long downturn without their cars stalling out."

A Saturn engineer says suppliers need to better handle management/worker relations. "They need to listen to people who actually work the floor and use some of the ideas that make sense," he writes. - Tom Murphy