Auto suppliers surge

The $200 billion share claimed by the suppliers of parts is steadily increasing against the roughly $1 trillion of the global car market. The change has been purposeful and profound, initiated primarily by the Big 3 original equipment manufacturers - General Motors, Ford and Chrysler - in the US as market forces compelled them to change their traditional integrated ways. It has taken shape in a process in which the OEMs push out to specialized experts the responsibility for ever more and ever larger systems to be bolted onto the chassis on the assembly line. It creates enormous savings in RD, labor and capital, enables suppliers to build in creative efficiencies and advances in customer appeal, for quantum jumps in productivity, cost efficiencies, sales and profits. As a result, OEM management changed its attitude toward suppliers. They thrust upon suppliers more responsibility and risk - and the chance for the biggest, smartest supplier to make more money by creating more opportunities to apply their skills. Ways that a number of suppliers are handling this challenge are discussed.