Automotive News - September 8, 2008 - (Page 14) 14 • SEPTEMBER 8, 2008 A crash course in collaboration Makers and suppliers together can manage inevitable surprises John Campi There is no doubt that the U.S. auto market has serious problems. Systemic change, arguably an inevitable surprise, has hit the Detroit 3 especially hard. Why do I refer to it as an “inevitable surprise”? First, auto industry executives must have had their focus on something other than the world view of what drives automotive design and environmental concerns to have missed the global movement to more-fuelefficient vehicles. Did those executives really think the United States would be spared the escalating price of gasoline? Second, with gasoline prices at the equivalent of $10 to $11 a gallon in Europe, Japan and elsewhere, those executives were surprised when U.S. consumers made a massive move to more fuel efficiency when gasoline reached $4 a gallon here. Let’s look at the cost side. For the first time in U.S. history, a reduction in demand within the auto industry has not been reflected in a reduction in demand for base metals with the associated price reductions. Instead, we see unprecedented price escalation in base metals, driven fundamentally by the escalating demand from Brazil, Russia, India and China. That is another inevitable surprise. savings in the design phase and not post-launch will stem the violence. We must conduct business in a manner that is very different from what we have done in the past. Our efforts, when done appropriately, will garner a cost improvement impact of more than $1,000 per vehicle. The character of any individual or company is tested only during times of stress. Clearly, all of us in this industry will be tested during the next 12 to 18 months as we work through the economic transition that our industry and nation are experiencing. Suppliers that offer world-class technology and world-class quality and have access to low-cost capital and a global footprint will weather the storm better than others. In fact, those are just four of the important reasons Chrysler selected Denso as a supplier of choice. However, that doesn’t mean Chrysler is not interested in working with other suppliers. At Chrysler, we will focus on supporting those suppliers with the greatest need as we work our way through these difficult times. Each request will be managed individually with special attention to the strategic position of the supply base and the needs of our company. EDITORIAL STAFF 313-446-0361 E-mail autonews@crain.com Web site www.autonews.com Keith E. Crain Publisher and Editor-in-Chief Peter Brown Associate Publisher and Editorial Director DETROIT 313-446-0361 Fax: 313-446-0383 1155 Gratiot Ave. Detroit, MI 48207-2997 David Sedgwick Editor dsedgwick@crain.com Edward Lapham Executive Editor elapham@crain.com Richard Johnson Managing Editor rjohnson@crain.com John K. Teahen Jr. Senior Editor Mary Beth Vander Schaaf Deputy Managing Editor Charles Child International Editor David Kushma Retail Editor Dave Guilford News Editor Philip Nussel Special Projects Editor James B. Treece Industry Editor Jesse Snyder Senior Writer Karen Faust O’Rourke Insight Editor COPY EDITORS: Bob Allen, Tom Fetters, Patricia C. Foley, Kenn Jones, Gregory Skwira Susan Zavela Bamford/Graphics Editor Rick Kranz/Product Editor REPORTERS: Leslie J. 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JOE WILSSENS comment to work together on common issues. As we look at the volume adjustments that are being made, Chrysler did the best job of anticipating the downward market (initiated, I might add, by the leadership and vision of a nonautomotive guy named Bob Nardelli), by making the tough decisions to remove capacity and volume projections in the later part of 2007. GM and Ford made those moves only after being hammered by the market shift in the first half of 2008. The impact to the supply base is being amplified by the swiftness of the volume drops in parts requirements. Many of the suppliers in question may find it difficult to recover from the financial impact of the reduced volume exacerbated by the unprecedented rise in raw material costs unless they can collaborate with the vehicle makers. Suppliers and vehicle makers must share in the management of those inevitable surprises. Ultimately, consumers will have to pay for more expensive products. Like it or not, we are facing a period of increased inflationary pressure. Now more than ever, vehicle makers and suppliers must work together to find a solution that can provide a win-win scenario. Chrysler’s challenge As has been stated repeatedly, we at Chrysler want to work in fierce collaboration with our suppliers to drive waste out of the supply chain and enable both parties to share the savings in a manner that helps offset the economics we face. This is why I have stated a goal of 25 percent reductions in supply-base cost as an imperative during the next three years. That will be a collaborative effort between our suppliers and Chrysler. The internal focus for Chrysler’s procurement organization will be in three areas: schedule stabilization, complexity reduction and improved management of change notices. All three initiatives speak to issues that our Chrysler management team must execute. Change notices are random acts of violence in the supply chain. Limiting the frequency of change notices (barring changes made to react to safety concerns) to a couple of set points in the development cycle and focusing our efforts on looking for What do you think? We would like to hear from you. Send a letter to the editor via e-mail (autonews@crain.com) or to the Detroit address near the top of the box at right. Here’s what we need. No more than 250 words Your name and title, company name if we can print it, city and state; or tell us about your connection to the auto industry Your phone number or e-mail address Your permission to print it Win-win General Motors, Ford Motor Co. and Chrysler LLC use many of the same suppliers. The common practice for cost reduction generally has not been a collaborative effort seeking a win-win scenario. In fact, all three have been somewhat abusive with their demands. That has led to an atmosphere of distrust, making it difficult for automakers and suppliers Dodge wouldn’t rush the RamBox continued from Page 12 cost advantage over steel. The result is that many automakers today are switching back from plastic to steel. The basic properties of steel prohibit fuel vapor permeability from tanks, lines and filler tubes. In addition, the advances in steel, such as high formability for complex shapes and improved corrosion resistance for traditional and new biofuels, make steel attractive and cost competitive for all vehicle fuel system components. Steel is 100 percent recyclable. Unfortunately, in spite of research to find ways of recycling plastics, the current practice is to put plastic fuel systems in landfills at the end of their service life. RONALD P. KRUPITZER Vice President Automotive Applications American Iron and Steel Institute Southfield, Mich. To the Editor: On behalf of Chrysler LLC and in support of our 2,600 Dodge dealers, I must express disappointment with the Aug. 25 Automotive News story “Dodge dealers: We’re in a box.” Frankly, we are amazed that your lead story about the 2009 Dodge Ram press preview focused on a few discontented dealers. As you reported, the segment-leading RamBox option will be available in October, vs. September, when the first wave of 2009 Dodge Ram trucks hits dealerships. To add perspective, the idea of a RamBox concept was introduced later in the vehicle’s development process. Therefore, to achieve its expected level of quality and maintain our launch schedule commitment, it would not have been prudent to introduce this feature at the vehicle introduction. Further, as promised, the timing of the RamBox pricing is aligned with its introduction. To date, U.S. Dodge dealers have placed more than 20,000 orders for the 2009 Dodge Ram. That takes us well into the fall, when our marketing launch kicks in and the all-new Dodge Ram trucks, with and without the RamBox, will be available. We are pleased that the 2009 Dodge Ram is receiving positive reviews. From the truck’s styling, interior design and quality to its multilink coil springs, Hemi(r) performance http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - September 8, 2008 Chrysler Financial hikes dealer floorplan fees Back in business? Detroit's best bets for cash: Feds, UAW Document fee suits swamp Missouri dealers Honda's family squabble Used truck prices rebound Ford mulls Lincoln compact Toyota delays RAV4 plan Proposed flex-fuel mandate roils industry Chrysler sues consultant over sourcing Cobalt transaction prices are up $775 since April Nissan looks to Mexico for engineering aid To retain truck buyers, Nissan offers more stuff Press: Chrysler is pushing forward on electric cars Leasing falls to 4-year low GM: Currency shift stalled Astra Dealers say they can sell the Republican ticket Industry loans clash with GOP climate Grand Cherokee will get axles from new plant Makers must resist urge to backslide as gas price dips Times are tough outside the U.S., too Chevrolet does tout its small cars Let natural gas power the fuel cell A crash course in collaboration Dodge wouldn't rush the RamBox Plastics are losing cost advantage Suppliers expect to benefit from tougher CO2 rules 'People just want Ford to go' For now, Honda will skip electric vehicles Toyota, Subaru enter race to market electric vehicles China exports squeezed Study: 15% of wrecked autos got washed titles Mercedes megadealer is bullish on luxury Sheehy: 'We are not in business for nostalgia' Automakers use driving schools as marketing tools Dodge smoothes Ram's rough edges â a little Honda touts leasing while others fall back Alysha Webb Study: Nonprime car loans get longer Dealer CPA group picks leader BMW, Edmunds team up on loan site for consumers Va. Honda dealership loses protest bid Judge throws out deceptive-ads lawsuit against Toyota in Arkansas Mo. dealership's protest gets go-ahead Pa. court throws out suit against Ford, dealership Dealers Ross' interiors company pushes into China, India More than a game Nissan's Tavares: Green conference keynoter Quality group seeks to set consulting standards Personnel Dana to shift HQ by Sept. '09 Tenneco to supply Volvo XC60 BMW gets Siemens conveyors IAC to cut 280 jobs in Sweden Polytec to acquire Peguform Metaldyne to sell Italy operation Federal-Mogul to build India plant Beck, Delphi make pact TRW to supply Chinese sedan Auto profits rise in Russia Black Book expands data Hayes Lemmerz cuts losses Ford: Buyouts are a tough sell GM's party plans include production Volt An ice-cold August for auto sales Big drop in Aug. output Lights, camera . . . Volt? In case the roads get too quiet . . . The Insight rides again Lagonda brand will be back Milwaukee road trip: No old pals, but 1 new lesson Choice of Odell seen as Ford vote of confidence in Volvo Dana sort of wins an award Automotive News - September 8, 2008 Automotive News - September 8, 2008 - (Page Introducti) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 1) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 2) Automotive News - September 8, 2008 - Toyota delays RAV4 plan (Page 3) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 4) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 5) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 6) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 7) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 8) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 9) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 10) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 11) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 12) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 13) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 14) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 15) Automotive News - September 8, 2008 - Suppliers expect to benefit from tougher CO2 rules (Page 16) Automotive News - September 8, 2008 - 'People just want Ford to go' (Page 16A) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16B) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16C) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16D) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 17) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 18) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 19) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 20) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 21) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 22) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 23) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 24) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 25) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 26) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 27) Automotive News - September 8, 2008 - Automakers use driving schools as marketing tools (Page 28) Automotive News - September 8, 2008 - Dodge smoothes Ram's rough edges â a little (Page 29) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 30) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 31) Automotive News - September 8, 2008 - Judge throws out deceptive-ads lawsuit against Toyota in Arkansas (Page 32) Automotive News - September 8, 2008 - Pa. court throws out suit against Ford, dealership (Page 33) Automotive News - September 8, 2008 - Dealers (Page 34) Automotive News - September 8, 2008 - More than a game (Page 35) Automotive News - September 8, 2008 - Personnel (Page 36) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 37) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 38) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 39) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 40) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 41) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 42) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 43) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 44) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 45) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 46) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 47) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 48) Automotive News - September 8, 2008 - Big drop in Aug. output (Page 49) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 50) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 51) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 52)
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