Message to Big 3: Work with parts makers

1/12/2005

DETROIT - Automakers and suppliers have common pressures - such as increased global competition and decreased pricing - and the Big Three needs to work with their parts makers or face the fate of other dwindling U.S. industries, a former auto executive says.

The best way for the Big Three to compete with Asian automakers, which have a much better relationship with suppliers, is to define responsibility for engineering and other tasks with parts makers and not look over their shoulders, said Thomas Stallkamp, an industrial partner with Ripplewood Holdings, a New York private equity firm.

"There's just not enough honest and two-way communication and collaboration between automakers and suppliers," he told 250 people yesterday during an analyst conference in downtown Detroit.

A former Chrysler Corp. and DaimlerChrysler AG executive, Mr. Stallkamp is credited with helping lead the automaker to profitability in the 1990s by forging strong ties with suppliers, saving the automaker $6 billion.

He was forced out, however, soon after Chrysler was acquired Daimler-Benz of Germany, and became an executive at engineering supplier MSX International in Warren, Mich. for a time.

Mr. Stallkamp was the keynote speaker yesterday at a Society of Automotive Analysts conference at the Detroit Marriott Renaissance Center. The annual meeting takes place before the public opening of the North American International Auto Show in downtown Detroit, which is open to the public from Saturday through Jan. 23 at the Cobo Center.

The Big Three have long had a dictatorial role with suppliers, which was once accepted, but no longer works, Mr. Stallkamp said. As Chrysler, General Motors Corp., and Ford Motor Co. are challenged by Japanese, Korean, and possibly even Chinese automakers, they need to be more collaborative like Honda Motor Co. and Toyota Motor Inc., he said.

"The result will be a system where redundant costs will be eliminated," he said. Other benefits will surface, he added, such as a shorter development time for new vehicles.

Otherwise, the Big Three will continue to lose out to Asian automakers, he said.

"It's not a situation that I want to see happen or I feel is inevitable," Mr. Stallkamp said. "I'd rather be a supplier right now than an [automaker]."

Suppliers, he said, need to do their part in changing relationships with the automakers by delivering on tasks with which they are charged.

Contact Julie M. McKinnon at

jmckinnon@theblade.com

or 419-724-6087.