EARLIER IN THIS DECADE, frustrated US suppliers watched thousands of new Japanese vehicles going into production in North America without their parts.
They found themselves left out of the new business and marginalized by the new Japanese-owned parts factories.
There were cries of unfair business practices and demands for congressional investigations. The keiretsu, the interlocking relationships Japanese automakers have with their suppliers, became the target of trade quarrels between Washington and Tokyo.
The keiretsu system does not evoke the same response today. In North America, Japanese transplant automakers are awarding more contracts to American manufacturers. According to the Motor Equipment Manufacturers Association, US suppliers now account for up to 16 percent of Japanese automakers' component purchases in North America, more than twice their market share just four years ago.
The association is aiming at the ambitious goal of up to 30 percent.
'We don't feel we are being stonewalled. We want to make sure that (sales) continue to grow,' says Chris Bates, MEMA's vice president of international affairs.
Although recent international currency fluctuations helped Japanese suppliers, long-term trends now appear to favor North American manufacturers.
But now what?
The next step, Bates says, is for American manufacturers to supply Japanese automakers outside North America. One hopeful supplier is Tenneco Automotive, the Illinois-based maker of exhausts, shock absorbers and other chassis components.
In the early 1980s, Tenneco was publicly critical of the Japanese automakers' record in signing up American suppliers.
Over the past five years, Tenneco achieved a fourfold increase in sales to Japanese automakers, accounting for 15 percent of Tenneco's total sales of struts and exhausts.
Breaking into that market took more than complaining. To do so, Tenneco had to find some Japanese allies.
Tenneco signed two technical agreements. One is with Unisia-Jecs Corp., a keiretsu supplier to Nissan. Tenneco would supply Nissan via Unisia-Jecs. The second deal was through Tenneco's Walker division, which signed an agreement with Futaba, a supplier in Toyota's keiretsu.
The agreements gave Tenneco the ability to manufacture components designed by its Japanese partners. The arrangement gave Toyota and Nissan more confidence in Tenneco's expertise.
Now Tenneco hopes to win contracts to supply Japanese automakers in Japan. That's a tough nut to crack, admits Mark Frissora, Tenneco's senior vice president of North American original equipment.
'If you penetrate the market in Japan, you can do that only through a joint venture with a keiretsu partner,' Frissora says. 'If we help them in Europe, they can help us in Japan. We are hoping for a deal this year.'
To break into Honda's business, Tenneco took a different approach: It relied on hard work and research. Before it had a relationship, Tenneco performed, at its own cost, an analysis of the 1991 Accord's exhaust system.
The company then approached Honda with free suggestions on how to cut the system's costs and improve its performance.
Honda rewarded Tenneco with an exhaust pipe supply contract.
Honda was somewhat easier to approach because it does not have the comprehensive keiretsu network that older Japanese automakers have. Because Honda only entered auto production in the 1960s, it relied on existing suppliers rather than establish its own network.
In North America, Honda resolved to create a network of local suppliers. It first concentrated on raw materials, then began purchasing finished components from American suppliers.
Not so fast
Suppliers like Tenneco are beginning to win business.
'We are pursuing a regional strategy. Each region is self-reliant, so we need good relations with local suppliers,' explains Honda spokesman Tak Sonoda.
All automakers, Japanese or American, need access to the best technology available. If a keiretsu supplier does not have that technology, it may lose contracts to American competitors, says Greg Janicke, an analyst with CSM Corp., a consulting firm in Lansing, Michigan.
But there may be limits to the amount of business American suppliers can hope to win. Keiretsu suppliers spent heavily to set up production in North America. Companies like Toyota and Nissan are mindful of the risk their suppliers took. 'There is a considerable amount of loyalty,' says Janicke. 'They won't abandon their suppliers.'