It's the statement automotive component manufacturers have longed to hear for decades. ``The Detroit auto companies-which previously had focused on the lowest possible price-are starting to grant suppliers price increases for new technology and materials costs.''
The words are from a story in this issue picked up from Automotive News, which, like our publication, is owned by Crain Communications. AN had a panel discussion at a supplier roundtable it sponsored in Detroit, and the article was part of the coverage of the event.
The panelists-an esteemed lot, CEOs and/or presidents from five major powertrain and emission control equipment suppliers, a couple of which have rubber product operations-were discussing the Detroit auto makers' newfound interest in producing cleaner, more fuel-efficient vehicles.
Prolonged higher fuel prices and the nation's over-reliance on foreign oil has spurred Congress to demand an increase in auto fuel economy standards. That, the suppliers said, has caused American auto makers to become interested in some of the green automotive technologies of Europe.
The panelists said the Detroit auto makers are hot on transferring the European fuel-saving technology to America. And they recognize they have to rely on suppliers to make such a fast change.
Here's the most interesting part: The auto makers seem willing to pay for that effort.
This from an industry that traditionally-we'll be kind-has been more preoccupied with saving its own skin than helping its vendors.
Nevertheless, periodically the former Big Three (alas, now just the Detroit Three) auto makers talk about partnerships and other ways of playing nice with suppliers. Then times get tough, and the old bully returns.
Things might be different this time. Panelist Linda Hasenfratz, CEO of Linamar Corp., put it best: ``You can't eliminate somebody's margin, or you're going to eventually eliminate that supplier.''
If the Detroit auto makers really do start compensating their suppliers adequately, they'll find that in the auto game, there doesn't have to be just one winner.