http://www.usatoday.com/money/autos/...-visteon_x.htm

"The bailout "suggests a massive transfer of costs from Visteon to Ford," wrote Merrill Lynch analyst John Casesa in a note to investors as word of the deal spread. "The deal at this stage clearly looks positive for (Visteon) and negative for Ford."

Certainly a smart move by Ford, but boy... that's gotta hurt.

 

They must have felt left out of all the press coverage from the Fiat fiasco...

 

How long before GM has to do the same for Delphi?

 

Could be soon, depending on the structure of the spin-off. If Delphi was not saddled with the legacy costs, then Delphi way not require it.

BUT, I will tell you this:

Either GM and Ford will take responsibility for the increases in steel raw material costs or there's going to be a tremendous shake-up in the supply base...

Basically, it'll go like this...

Supplier:
I need a price increase for the added costs due to steel price increases.

GM:
No.

Supplier:
Go get another supplier. You have 30 days to do it. Your tools will be available on our loading dock at your convienience any time during that 30 days.

 

Jealous?

 

I always thought that the Visteon spin-off was done a little hastily. It's like Ford saw what GM did with Delphi and thought, yeah we should do that too! Except that Delphi was a much stronger company in terms of technology, market breadth, and finances. I'm not surprised Ford has had to bail out Visteon, although at this point I don't think GM will have to do the same with Delphi.

 

I don't really consider it a bailout, because they are doing what they should have done in the first place. They were just following suit, and created a very uncompetitive company. The UAW threatening strike didn't help either. Visteon's makeup is now what it should have been at spinoff.

 

Agreed. Plus, without the bailout Visteon would have had no choice but to file bankrupcy by the end of the year. That's not good for Ford or the UAW.

 

I think most folks would be happy if GM stopped requiring ransom payments (actually, pulled-ahead yearly cost reductions) as a pre-requirement for quoting new business.

So, let's look at the options for a good Tier 1 supplier: 1) pay ransom to a domestic OEM to obtain the opportunity to win new business by bidding it at an unprofitable price, while losing money on the current business; or 2) devote your best resources to customers that will allow suppliers to make a reasonable profit and at the same time will put suppliers on negotiated purchase programs for commodities like steel and resins.

Delphi and Visteon's problems are numerous, but the real killer was the fact that GM and Ford treated them like they would any other supplier (read: with slightly less respect than the dog crap you scrape off your shoe after stepping in it).

 

AGREED 100%.

I know my company thinks so much of themselves, that after we pass an internal policy to cut 5% of all spending, we turn right around and MANDATE that all of our suppliers cut their prices to us by 5% or risk having to re-bid their goods against other companies.

I guess the geniuses that "run" my company from a big city far away don't realize that it will take me and my engineering buddies (and the purchasing department) 100's of man-hours EACH to do that kind of bidding...
1) Sending out prints to bid (which printing THAT many 24"x36" drawings is expensive in it's own right).
2) Answering a bazillion questions from potential bidders on "can we change this", or "can that radius be larger" type issues.
3) Travelling to do due-dilligence and QC inspections at "new" shops.
4) Qualifying new parts and processes for new suppliers.
5) Adding new suppliers to the vendor database and purchasing system.
6) Writing new contracts and confidentiality agreements for suppliers.
7) Getting new suppliers to ship "where needed, when needed" is a biotch.
8) Getting the new parts and components into service. (you guys don't know how a maintenance guy can stop your process when he says, "I wuz fixin' this machine and noticed this new bushing wasn't the same color as the old one, so I stopped to wait for you to come look at it before I put it in." I'm 124 miles away at the time BTW.

I could go on and on - but I think the point should be clear.
My company will inadvertantly spend $100 because of a bean-counters "great idea" to pass along a $5 cost to a supplier. And we still think we saved 5% when it's all done.

Wouldn't you hate to be a top-man in eitherVisteon or Delphi right now?
I'd rather be selling ski boots in Africa.

 

If I had to describe in 8 words the way I feel about working in the supplied-component industry right now, that pretty much does it.

Personally, I think that the best way to save money on supplied components would be to first stop pushing the tough work as far down on the supply chain as possible. By the time that the Tier 4 guy is doing some process that's a real SOB to get right and then the part's marked-up with profit by the three tiers above him, the OEM is paying a lot of money.

But when the beancounters up front look at where the money's going and find out that maybe 60-70% of the gross income goes right back out the door to suppliers, the response is always the same - go beat-up on the supply chain until they're black-and-blue. You don't want to kill them, of course, because then you'd have to re-source the part and you'll find out just how good of a deal you were getting with the previous supplier. You just want to draw some blood, that's all.

Alternatively, just force your suppliers to move off-shore, and then wonder why there's no patriotism left in the car-buying process.