Friday, September 25, 2009

No Parts for Chrysler?

One of Detroit's (as in the US car industry) biggest problems over the past several years was its inability to partner productively with its suppliers.  Sure, stupid and destructive union contracts were the principal flaw in their business model but that cascaded into other problems.  Because their union labor was so expensive the Big Three had to beat their vendors into the ground to compensate for high labor costs.  Thus when a parts supplier had a great new technology or an innovation to share with the OEMs, it bypassed the Big Three and went straight to OEMS like Toyota and BMW, because they could be relatively assured that they'd get some margin out of the deal.  So the big three always got sloppy seconds on the best technology coming out of the components industry.  Now that the government owns Chrysler and GM, it's not much better.  Vendors are reluctant to play with the US government.  I'll bet the geniuses on Ron Bloom's Car Czar panel never even thought that a vendor wouldn't want to sell to GM or Chrysler. Whoops. Welcome to commercial reality.  Between consumer preference for non-government-owned Ford and vendor persnickitiness, it'll be remarkable if government ownership doesn't drive the GM and Chrysler into the ditch by 2011.

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