Metal fabricators don’t have a lot in common when trying to compare one job shop to another. The same goes for the customer segments they serve—with one major exception. Most don’t, and have no desire to, work with the automotive industry.
That’s quite the statement given the desire of businesses to diversify their customer bases as they look to shield themselves from the ups and downs that affect all sectors. They know that when it comes to working with the Detroit Three, it’s usually “all for one and none for all.”
But the Great Recession changed all of that, right? The U.S. automakers learned humility and realized that they could succeed in a global marketplace only if everyone in the supply chain had the same chance to succeed, correct?
Nope. Replacing the constant demand for cost reduction above all else with a spirit of cooperation and joint ownership of the manufacturing process never took place.
The latest evidence of this lack of evolution occurred on the eve of an annual automotive supplier conference in Traverse City, Mich., in early August. Automotive News reported that General Motors is hoping to adopt a new purchasing contract that would put the financial liability for safety recalls on those companies that supplied the components that were suspected of being unsafe. According to a lawyer who works with an association that represents automotive suppliers, the manufacturers of components that fall under one of these safety recalls would be held liable for the recall costs even if the part or assembly met original OEM specifications.
That’s like an unsatisfied diner complaining about a dried-out lamb chop, after instructing the waiter to have it cooked well-done, and then expecting the chef to eat the cost of the meal. Just as the customer certainly doesn’t make the restaurant happy with such behavior, the automakers can’t be expecting their supply chains to welcome such tough contract terms. It’s mind-boggling behavior.
The Detroit Three have alienated a large part of the metal manufacturing base in the U.S. It would be a shame to see them do further damage by following through on a contract strategy like this.