It's another kind of trickle-down theory.
Now that Tier 1 suppliers have followed auto makers into the global marketplace, they expect their suppliers to join them wherever they do business.
It's among the many stressful developments in the changing supplier community, and one that likely will accelerate consolidation of the industry, said Neil De Koker, managing director of the Original Equipment Suppliers Association.
``If you've been happy for three or four generations with your family-owned company, you're located near Detroit, you're perfectly happy, you speak one language, and you know everybody in the local area, that's wonderful,'' De Koker said recently. ``But all of a sudden, to survive you're being told you've got to be in Europe, or have a relationship there, or (the customer says), `I want you to be the lead supplier, responsible for all of this area, these products for me, globally.' ...It's very challenging. It can be very difficult.''
The difficulties suppliers face mean more demand for services of an organization such as his, De Koker said.
``Typically, trade associations are at their best when times are the toughest,'' he said. ``There is such desperation. The CEOs will call up and say, `What are you doing for me in this area?' ''
But the OESA is a kind of self-help organization. It does much of its work through councils-groups of members who exchange information and develop positions on electronic commerce, environmental topics, legal issues and other matters.
``This provides a forum for peers of different companies who have similar issues, whether they are human resources executives or presidents of companies or e-business information technology executives, or whatever,'' De Koker said. ``It provides a chance to sit with your peers and address issues that you address in your company every day.''
The Original Equipment Suppliers Association was formed less than four years ago. Its membership-consisting of Tier 1, 2, 3 and 4 companies that supply parts, components, materials and services to original equipment manufacturers in North America-has grown to 272 companies with global sales of $280 billion last year.
Based in Troy, the group is a sister organization to the Motor & Equipment Manufacturers Association in Research Triangle Park, N.C.
De Koker, 58, a 40-year industry veteran, said the biggest challenges facing his group's members involve competition in the marketplace and relations with auto makers.
``The OEMs need to change their behavior, and the suppliers need to change their behavior,'' he said. ``It's not just a one-way street. We're both behaving in a way that's getting us to a zero-profit, zero-return-on-investment industry, where nobody wants to invest. So you don't have the capital, and you end up self-destructing.''
He recommends more collaboration among auto makers and suppliers during the development of vehicles. Japanese auto makers have shown that collaboration cuts production problems, improves quality and reduces costs.
``With the Big Three, there tends to still be us-vs.-them,'' he said. ``The relationship is with purchasing. Purchasing has no idea what to do with something that is offered that would involve something in the manufacturing plant. They just want the lowest price.''
There are signs of change. Each of the Big Three has started shared savings programs that assign engineers to work with purchasing departments and suppliers, De Koker said, adding: ``Here it is, 2001 and 2002, and it's finally starting to happen.''