General Motors is worried that its suppliers have not got the message about the 'millennium bug.'
Eight to 9 percent of GM's Tier 1 suppliers have not solved a software bug that could cripple their computers in 2000, a recent survey of GM suppliers shows.
Fearful that lax suppliers could cripple production, GM is sending auditors to visit these suppliers to gauge the extent of the problem.
'There are some suppliers who don't recognize what the year 2000 will do to their manufacturing systems,' said Harold Kutner, GM's vice president for worldwide purchasing.
Kutner made his comments last month after a panel discussion at the Automotive News World Congress in Detroit.
1/800' could mean trouble
The difficulty stems from existing lines of computer code that use two-digit figures for each year. The current code on many systems translates '00' as 1900 instead of 2000, which can cause a system to malfunction or shut down.
This year, GM will evaluate two billion lines of code on its own network of 7,000 computer systems.
But GM's suppliers may not be as diligent, Kutner fears.
If vendors fail to correct the millennium problem, the bug could disrupt the production and shipment of parts.
Since many GM suppliers deliver parts on a just-in-time basis, even a temporary delay could cause chaos in assembly plants.
To solve the problem, the major US carmakers are working with the Automotive Industry Action Group in Southfield, Michigan, which administered the supplier survey.
While the millennium bug worries those looking ahead a few years, turmoil in Asia could be the auto industry's biggest headache in 1998.
Mixed reaction to Asia
GM appears to be both beneficiary and victim of Asia's turmoil, judging from Kutner's remarks.
A relatively cheap yen could allow Japanese automakers to cut prices and boost vehicle exports to Europe and the Americas.
'Because of the manipulation of the yen, we're going to see tremendous pricing pressure on all the manufacturers in North America,' Kutner said.
Kutner said Japan 'is trying to export its woes' - that is, relying on exports to pull out of a recession - rather than carry out politically difficult economic reforms.
Yet, GM could benefit from Asia's troubles, too. The automaker hopes to buy raw materials such as steel, copper and aluminum at bargain prices.
Suppliers could benefit by purchasing raw materials at a discount through GM.
'We are sending our people into parts of the world where they can look for cheaper (raw) materials,' Kutner said.
While Kutner focused on Asia, other panelists discussed the push by major seat makers to design entire vehicle interiors.
Lear Corp., Johnson Controls Inc. and Magna International Inc. each boast about their ability to produce seats, instrument panels, headliners, door panels and flooring.
But they are meeting some resistance from their own customers. During the panel discussion, senior executives from Honda and Chrysler said they are not ready to put any single supplier in charge of producing an entire interior.
'We just don't have the confidence in any one (supplier) to take that next step,' said Jonathan Maples, Chrysler Corp.'s executive director of supplier management.
Honda appears equally reluctant. The automaker now allows its North American operation to design entire vehicles, but is not willing to cede so much control to a supplier.
'For us, it is not the direction in which we are headed,' said Cesar Panaherrera, vice president of purchasing at Honda of America Manufacturing Inc.
Lear Corp. President Robert Rossiter conceded that suppliers like Lear have gained influence. But he disputed suggestions that seat makers have the power to dictate prices.
Moreover, Lear hopes to grow even larger. GM is selling its Delphi seating business, and Lear wants to buy it, Rossiter said.