Bloomberg News

Automaker-Supplier Improvements Stall, Study Says; Toyota No. 1

May 13, 2013

Improvements in automaker-supplier relations are stalling, with the difference between the top- and bottom-ranked companies narrowing, according to a survey of auto-parts makers in North America.

Toyota Motor Corp. (7203) recorded the top score in the survey with 297. Chrysler Group LLC, the lowest of six ranked companies, was within 19 percent with a 250 score in the survey conducted by Planning Perspectives Inc. In 2005, Toyota was No. 1 in the survey at 415, while the predecessor of General Motors Co. (GM:US) was last at 114.

“The automakers are failing miserably at recognizing that suppliers can help them,” John Henke, chief executive officer of Planning Perspectives, said in an interview. “Too often they look at them as enemies.”

Progress in automaker-supplier relations reached a plateau this year, Henke said. A score of 250 to 350 in considered adequate by Planning Perspectives. The six automakers ranked in survey are all rated adequate, with Toyota and Honda (7267) Motor Co. declining since 2005 from good ratings and U.S. automakers improving from scores considered poor by Birmingham, Michigan-based Planning Perspectives.

The plateau is a sign that carmakers either don’t have a plan in place or that it’s not being implemented at the lowest levels of the companies, Henke said.

“I’m inclined to think it’s the former,” Henke said.

Toyota, Honda

Of the six automakers ranked, Honda was the only one whose score declined from 2012, 287 from 293. Honda was still No. 2 behind Toyota. Tokyo-based Honda’s score has declined six straight years.

Natural disasters in Asia in 2011 “forced us to slash production, then rapidly ramp up in 2012 to meet customer needs,” Ed Miller, a Honda spokesman, said in an e-mail. “We are fully aware that this made business difficult for some of our suppliers. We are working proactively” to improve relations with vendors, he said.

Toyota, based in Toyota City, Japan, reversed a five-year slide with its gain from 296 in 2012.

Chrysler’s 250 score represented a rise of less than 1 percent from 2012. The Auburn Hills, Michigan-based company, which is majority owned by Fiat SpA (F), improved for the fifth straight year.

Ford Motor Co. (F:US), based in Dearborn, Michigan, was the biggest gainer, rising 1.5 percent to 271 while remaining in third place for the second straight year. GM was unchanged at 251 and ranks fifth. The Detroit-based automaker, which exited bankruptcy in 2009, has more than doubled its standing with suppliers since bottoming out in 2005.

Nissan Motor Co. (7201), based in Yokohama, Japan, was ranked fourth and its 256 score was unchanged from last year.

Comments from the companies show they pay attention to the survey results.

‘Learning Opportunity’

“While we appreciate our ranking position, we clearly understand there are areas for improvement,” Robert Young, Toyota’s head of purchasing for manufacturing operations in North America, said in a statement. “We will continue to use these results as a valuable learning opportunity to help improve our relationships and the way we conduct business.”

Chrysler, boosted by the success of the Ram 1500 pickup and Dodge Dart, has had 37 straight monthly U.S. sales gains.

“A healthy, motivated supply base is critically important to our ability to deliver exciting, high-quality vehicles our customers,” Scott Kunselman, senior vice president for purchasing, said in an e-mailed statement. “We are continuously looking for opportunities to strengthen relationships even further.”

One Ford

Ford has earned $35.2 billion (F:US) in the past four years, following $30.1 billion in losses from 2006 through 2008. The turnaround helped the automaker boost its score 67 percent since 2007.

“We are on track with our One Ford plan, which includes supplier relations as a top strategic priority, and we are taking actions for continued improvement,” Tony Brown, Ford’s global purchasing chief, said in a statement.

Planning Perspectives surveyed 583 sales representatives and engineers from 441 direct suppliers in March and April, on areas such as trust, communication, helpfulness in engineering and the opportunity to make a profit.

The parts produced by suppliers, such as instrument panels, seats, axles and navigation systems, typically make up more than two-thirds of a vehicle’s value, Planning Perspectives has said.

While the survey collected data on European automakers, Planning Perspectives said it didn’t yet have enough information to rank those companies.

Had rankings been made on the data collected, Bayerische Motoren Werke AG (BMW) would have placed first among the Europeans, followed by Daimler AG (DAI) and Volkswagen AG. (VOW) BMW would have topped all automakers and Daimler would have ranked third, behind Toyota. VW would have ranked last, according to the research.



2013      Automaker       2013        2012
Rank                      Score       Score


1         Toyota          297          296
2         Honda           287          293
3         Ford            271          267
4         Nissan          256          256
5         GM              251          251
6         Chrysler        250          248

To contact the reporter on this story: Mark Clothier in Detroit at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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Companies Mentioned

  • GM
    (General Motors Co)
    • $34.03 USD
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  • F
    (Ford Motor Co)
    • $16.58 USD
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