BRUSSELS - Suppliers must be big enough and global enough to serve the global carmakers, say top purchasing executives. The executives also say that suppliers must remain innovative and flexible, which are usually features of smaller companies.
What does this mean?
'It's business as usual,' said Ronald Hutchings, president of supplier company S&H Fabricating and Engineering of the US.
Hutchings was one of six employees of S&H who attended the Automotive News Europe Congress in Brussels on 9-10 June. His company supplies General Motors worldwide with air conditioning units.
The heads of purchasing for GM Europe, BMW AG, Volvo Car Corp. and Mercedes-Benz addressed the 300 attendees. While their views were not precisely the same, they were similar.
Bo Andersson, vice-president of supply for GM Europe, wants global suppliers who can work locally.
Suppliers who can set up operations worldwide are especially attractive to the European arm because Opel products and methods are being used to take GM internationally and into South America and Asia, said Andersson.
The next step is a global GM, in which GM Europe and GM North American Operations are forged into a single unit, sourcing together using common processes and suppliers. While North America now represents 64 percent of GM's worldwide business, it will be just 40 percent in 10 years, said Andersson.
Wilhelm Becker, vice-president of procurement for BMW AG, said it wants high-grade components and suppliers who can be flexible and respond to the luxury maker's need to individualize cars. BMW is also looking for modular suppliers. The Z3 built in Spartanburg, US, is put together from 19 modules supplied by 18 companies.
He said BMW works closely with both core suppliers and concept suppliers. Core suppliers develop modules. Concept suppliers are companies like 3M, with an idea for a new mirror feature that uses a unique 3M raw material.
Christer Palm, vice-president of strategic sourcing and purchasing for Volvo, said Volvo also likes modules. 'I am great believer that modules drive down costs,' Palm said.
Like other carmakers, Volvo is reducing the number of suppliers it uses.
Johannes Rudnitzki, vice-president of purchasing for Mercedes-Benz AG, said suppliers must follow Mercedes into new markets like Asia, Central America and Africa. They must be involved early in the process, and they must care about the success of the car.
'The more suppliers know about our cars, the better,' said Rudnitzki. 'We need to be part of a common undertaking and have a common goal: the car itself.'
Small and medium-sized suppliers can continue to play a role by working with the larger firms, he said.