Toyota, Honda have best supplier relations in U.S. - study

  • Reuters, Detroit
  • Updated: May 18, 2015 13:14 IST

For the fifth straight year, Toyota Motor Corp and Honda Motor Co topped a study of automakers with U.S. plants in supplier relations, helping them get the best parts at the lowest cost.

Toyota was the tops in supplier relations, followed closely by Honda. Ford Motor Co was a distant third, followed by Nissan Motor Co. General Motors Co and Fiat Chrysler Automobiles NV were tied for last place.

Those six are the largest automakers in the U.S. auto sales market and have the largest U.S. auto industry production footprints.

Lagging relations with suppliers means less profit, said the study's author, John Henke, president of Planning Perspectives and a marketing professor at Oakland University near Detroit.

Toyota and Honda improved their scores by an average of 8.7 percent over the year, the study showed.

If the other four had improved their relations by as much they collectively would have added $2 billion in 2014 operating profit, Henke said.

GM would have earned another $750 million last year had its supplier relations improved 8.7 percent, the study found.

Suppliers have become more discerning about which companies they serve, said Henke, who has produced a study of relations of automakers and their Tier 1 suppliers for 15 years. A supplier will show its best new technology to the automaker that treats them best, he said.

Gone are the days when parts suppliers would build plants in order to take as much automaker business as they could get.

Suppliers "are not willing to put in the infrastructure to support all the business they could possibly get today because they don't know what's going to happen tomorrow," said Henke.

The 2008-2009 recession "spooked" suppliers away from investing for work that has not been contracted yet, and the best of them became highly efficient, Henke said.

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