The carrot and the stick

Not long after promising to forge strong new relations with key suppliers, Chrysler is now asking for massive cost savings from its suppliers. Forget the standard 3% cost-down, says new Chrysler Group CEO Tom LaSorda - he wants to see 10, 20, even 30%.  That's fair enough, as long as the automaker is giving suppliers sufficient room for actual innovation. Hopefully that's the case with the newfound enthusiasm for the longer-term contracts. With regards to where the parts will be sourced, LaSorda states, "If I find a part worldwide that can be built for $14 and they say, well we want to build it here for $20, it's their choice but we are only go to pay $14." Now, personally, I like to see products built where they are sold, and this is not the sort of thing that makes me want to choose a "nominally American" car over one that's actually built here with American parts but perhaps doesn't carry a domestic nameplate. But it's also increasingly clear across many industries that US consumers will not pay higher prices for the same-quality good that's built domestically, so Chrysler probably doesn't have much choice in this matter.