General Motors on Thursday presented suppliers with a new plan the automaker hopes will improve its relationship with them while cutting its purchasing costs.

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The Associated Press said that, under the plan, which will be in effect from the last quarter of this year to the end of 2007, GM will set cost-cutting targets for individual parts rather than setting overall corporate cost-cutting targets for 250 to 300 of its top suppliers.


GM spokesman Tom Wickham reportedly said suppliers have criticised GM for setting overall cost-cutting targets for supply companies even if they were meeting GM’s targets for some of their individual parts.


According to AP, under the new programme, a supplier that makes three or four separate parts for GM will be given a cost-cutting target for each part based on market data and other factors. Wickham told the news agency GM will give greater consideration to cost issues facing suppliers when they’re building certain parts, such as the high cost of steel.


“The idea is greater collaboration with the suppliers and hopefully greater cost savings for us,” Wickham reportedly said.

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The Associated Press said GM has 3,200 suppliers and spends $US85 billion annually purchasing parts. The automaker has had a rocky relationship with suppliers, which have accused the company of squeezing them to stem its own losses – $286 million in the second quarter.


AP noted that, in a survey of 259 suppliers this spring, 85% said they had a poor working relationship with GM, and just 3% said they had a good relationship, according to Planning Perspectives Inc. Suppliers’ trust in GM was at its lowest level in 15 years, the survey said.


Planning Perspectives President John Henke told the Associated Press GM’s plan is welcome but hardly revolutionary.


“Toyota and Honda have been doing this for decades,” he said. “It’s what they should have been doing all along.”