USA: Big Three keep squeeze on suppliers - reports
Ford and General Motors, facing heightened competitive pressure from foreign vehicle makers, are setting rigorous new targets for price cuts by their parts suppliers, Tuesday's Wall Street Journal reported, according to Dow Jones.
The report said the moves underscore the growing globalisation of the automotive industry, as vehicle parts, and entire vehicles, increasingly flow across borders in pursuit of economic advantage - Ford executives told 100 of the company's top suppliers at a meeting earlier this month that their prices eventually must match those of their lowest-cost rivals, including ones based in low-wage countries such as China.
Dow Jones said GM and Ford are straining to boost profits, which have been hit in their core North American market by two years of industry price wars. Detroit's Big Three auto makers, which also include DaimlerChrysler's Chrysler unit, need whatever cost cutting they can achieve to ease the painful consequence of selling vehicles with an ever-increasing amount of consumer rebates and low-cost financing deals, the report added.
Dow Jones said GM has warned suppliers that in order to retain its business, a supplier would have 30 days to come up with corrective measures if its price is found to be higher than that of a rival's.
Dow Jones noted that GM, Ford and Chrysler have for years been squeezing their parts suppliers, as the vehicle makers' profits and market share have come under increasing pressure from Japanese and European rivals.
Ford's latest demand ups the ante by more explicitly pitting its established suppliers, including Delphi, TRW Automotive and Visteon against rivals in low-wage markets, the report added.