Makes sense.....

Now, if enough of the supply base does this, the pendulum will swing in their (collective) favor, and it'll be GM who will have to adjust.

(Well, either that, or they'll outsource more stuff to foreign comanies to save cost liek most of the import manufacturers already do.... but they'll catch flack for doing it from every angle.)

It seems so hard for GM to do anything "right"... simply because there just is no "right" anymore.

Use American suppliers, and upset them because of demands they don't want to meet.... or use foreign supplies......... and upset American supplier becuase of demands they don't want to meet.....

It's a vicious circle.

 

GM simply needs to change the way the operate to the following premise:


GM is entitled to a world-class product at a fair price. The supplier is entitled to a fair profit.

Until GM does that, the supply base will concentrate it's efforts elsewhere... and GM will pay the price.

 

I agree.... but I think that would require a more "even" playing field.

It all comes back to the unfortunate fact that foriegn suppliers can (in general) supply parts cheaper... so if competitors are getting their widgits at 50 cents a piece, and GM is paying $1.00 a piece... there's gonna be problems.

For GM to compete, they either need:

A) The American supplier to bring their prices down, or

B) They have to shop elsewhere.

If they try Plan A, the suppliers say they are being unfair. If they try Plan B, the suppliers say they are being unfair.

I'm not laying this in the lap of the suppliers either...they certainly have to deal with economics just as much as GM does... in fact, I'm sure a lot of suppliers bust the ***** of THEIR raw material suppliers just liek GM does to them.... it's just one of those tough situations that there seems to be no magic solution to...

 

You would think that foreign suppliers can beat US suppliers, but the facts are very different.

In our commodity, NO foreign country can beat us on price. Our lowest cost production plant is here in the US. It beats Canada, Europe, Mexico and China... AS LONG AS the volume is high enough to justify complete automation.

Anything short of complete automation and we lose on cost.

Mexico does not automate well.
Canada's labor rate is not significantly different enough to force a move.
Europeans have downright silly work hour requirements (32 hours a week???) and the Euro conversion is killing them.
China has significant transportation problems and does not automate well.

There ya have it.

High labor content + low volume requires sourcing to leave the US.
High volume + low labor content = US sourcing and complete automation.

We have 2 plants in China, BTW.... I know of whence I speak.