Autoblog

Low wage countries are not the answer. Give it a couple of years and the Chinese will demand wage increases so they too can become consumers. It will come full circle.

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With the current worldwide energy crisis, the dependency on outsourced parts won't be too good a thing for chrysler when it costs many multiples more then it does today to ship parts and cars across the pacific. I know walmart understands this. That they can't get pots made for .99 and sell them for $30 anymore because it's not going to be financially viable. I'm not saying that within three years it's going to cost more to ship, but it will in the near future.

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@ Bakka:

Exactly what I forgot to mention in my post. Those two factors combined will not allow Chrysler, or any other company, do this.

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Because Chrysler needs even cheaper interiors...

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It's a shame it's gotten to this. Beating up on suppliers to save bucks when you will end up going overseas anyway. It wasn't always tghis way at Chrylser. Back when the "dreat team" ran the place they had the best relations of any automaker with it's suppliers, thanks to Thomas Stallkamp. Here's a link if you wish to read about it:
http://forums.industryweek.com/showthread.php?t=1544

Quote from the link:
"When he was head of purchasing for Big Three automaker Chrysler Corp., Thomas Stallkamp used to think all the time about collaborating with his key supply chain partners. As the nucleus of its own supply chain hub, Chrysler was in a good position to demand whatever it wanted from its suppliers. Like the other major automakers, Chrysler existed in a marketplace where just a few U.S. companies (Chrysler, Ford, General Motors) got to be the king, and all the links to their supply chains occupied progressively lower ranks.
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In the 1990s, when Chrysler was staring down one economic crisis after another, it became clear that a new approach to supplier management was needed. That led Stallkamp to look closely at the approach up-and-coming computer maker Dell was taking by forming tightly knit partnerships with its most important suppliers, an approach known as the extended enterprise. These types of collaborative partnerships are characterized by shared goals and rewards, clearly defined roles and responsibilities, and open lines of communication.

For years the American OEMs have been facing an expanding threat from Japanese automakers, so fittingly Stallkamp seized on a concept that dates back to the post–World War II days in Japan: the keiretsu. A keiretsu is an integrated group of companies that function as a joint partnership—kind of like a supply chain. Stallkamp cites the example of Toyota and its relationship with two Tier One suppliers, Denso and Seiki. "Instead of treating them as distant and independent entities, Toyota shares product planning and proprietary cost information with these two companies," he explains. :Both companies assume complete responsibility for developing the components that they are assigned on a Toyota project," with employees from each of these three companies often working in each other’s facilities.

The key, Stallkamp emphasizes, is that Toyota trusts its suppliers to meet their development and production deadlines. "Working jointly and in such close cooperation with its own keiretsu is one way that Toyota is able to leverage its development of new products and come to market more quickly than the domestic American automakers," he observes. Stallkamp introduced that idea of establishing and fostering a closer relationship with Chrysler’s own suppliers at his company, where an Americanized version of the keiretsu became known as Chrysler’s extended enterprise.

“The extended enterprise is a philosophy that we implemented which integrates selected suppliers in the whole supply chain," Stallkamp recalls. "Instead of looking at them as separate links in the chain, we concentrated on the chain itself and on managing that concept. Instead of managing the chain in little segments, we tried to do it holistically."

That led to the formation of Chrysler’s SCORE (Supplier Cost Reduction Effort) program. For the automotive industry, SCORE went beyond high concept and actually delivered on what the academics had been punditing about for years—a living-and-breathing model of strategic collaboration with supply chain partners. By seeking cost reduction solutions from its suppliers rather than demanding across-the-board price cuts (a tactic then in vogue at rivals General Motors and Ford), Chrysler not only rebounded from an economic crisis in the early 1990s but in fact achieved cumulative savings of $5.5 billion throughout the decade thanks to SCORE.

The natural tendency of companies when they get in trouble is to become more adversarial, but the opposite approach—partnering with your suppliers to develop collaborative relationships—is the best course of action, Stallkamp believes.

Many people mistakenly thought that SCORE was just a cost reduction program, he notes. "It was actually an idea generation program." For instance, Chrysler’s research and development (R&D) costs were the lowest percentage of sales of any automotive OEM, and yet the company was able to introduce more new vehicles than its competitors. How? By tapping into the R&D capability of its suppliers. Since Chrysler was awarding long-term contracts to suppliers who could meet defined targets, those companies came to view Chrysler as the best company in which to invest their limited R&D resources. It became a win-win situation for all those involved."

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Of course after Dumbler took over Chrysler, they grenaded this whole process I posted above and replaced it with what they familiar with - an adversarial relationship.

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another indication that Chrysler is being whipped into shape for a sale to a foreign company so Cebrebus can move their money to the next target.

Nothing wrong with controlling and cutting costs, but we all know that quality and fit and finish is going to suffer; that is the last thing Chrysler needs given its deficits in those categories vs. both Ford and GM.

Bet the boys at TATA can't wait to get their hands on the Jeep brand and to buy a ready built dealer network to import their low cost products into the U.S. Jaguar was just the opening salvo.

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great, cheap parts getting even more cheaper, i think i would rather buy a chinese car than a chrylser now.....

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Chrysler already uses the cheapest interiors in the industry, how can they squeeze 25% more cheapness out of it? I guess they'll use even thinner plastics and instead of steel beams, they'll use rubber beams instead. Hey, why have crumple zones, use rubber zones, have the vehicles bounce OFF the other vehicles...

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didn't this guy screw up the last place he was?

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This is part of the Autoblog post:

"Chrysler is also sharing its production schedule with suppliers to smooth out planning and reduce overtime and raw material costs for suppliers."

That actually sounds a little bit more like the SCORE program to me, so perhaps this scenario is actually a move back to that type of approach. It doesn't sound like they're just going to beat the cost reductions out of the suppliers.

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As you can see no new investments or new technology is going into the vehicles. This is a sign that Cerebrus is preparing for a sale or already in negotations.

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