DaimlerChrysler A.G. is doing a good thing by ordering its suppliers to provide it with millions in cost savings by Dec. 31, or lose the business.
It's good for consumers when the auto companies shake down their suppliers, because they pass the savings along to the auto-buying public. It also helps automotive component suppliers improve their bottom line. And, of course, it's guaranteed to boost the share price of the auto manufacturer.
So much for the fantasy.
Car prices go nowhere but up, automotive suppliers are bleeding and, last we looked, any stock related to the automotive field is in the toilet.
It's the last point—the stock market—that is behind DaimlerChrysler's metamorphosis from a "partner" with its suppliers to just another bully, like Ford Motor Co. and General Motors Corp. DaimlerChrysler's stock price is less than half what it was in 1999, the result of huge losses. Its credit rating has been downgraded, its development costs are soaring. It's hurting.
When things go bad for the auto companies—heck, when they go good—the first place they look for a handout is their supplier base. The same suppliers that must kowtow to every demand, no matter how cost-prohibitive, if they want the business.
Whatever happened to all the bold talk about "partnership" between auto companies and their suppliers? There's no question about who the "junior partner" is.
Sure, it's good that DaimlerChrysler is taking another piece out of its suppliers' hides. Good for nothing.