The Slate article that's linked below hits on a good point, and it's that GM and Ford are in trouble partially because they've finally reached the point where squeezing their supply base is no longer an effective means of reducing costs. While the author is spot-on in identifying the bankruptcy of some larger suppliers as a pretty clear indication that the breaking point has been reached, there's an additional factor that cannot be ignored. With the rise of the "transplant" OEMs (Asian and European automakers who build product in the US), many suppliers have effectively doubled the size of their customer bases. At the same time, consolidation among suppliers has shrunk the number of vendors for any given component. With more customers and fewer suppliers, it's created a situation nearly opposite that of what the automakers themselves face with their own customers. Automakers who once used their size to force unfavorable terms upon suppliers are now finding themselves pushed to the side, while those companies that engage in fundamentally fair business practices are getting the best service, price, and quality. Put in simple terms, karma's a real bitch.


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