A crucial deadline is looming on December 31 for many Daimler-Chrysler suppliers.
DaimlerChrysler has asked suppliers to double - from 3 percent to 6 percent - their cost-saving goals for 2001 over 2000 levels.
For those who can't make it, the company is quietly threatening to take away its business, according to several top supplier executives.
Until this spring, such harsh measures were unthinkable. But a new era has gripped DaimlerChrysler in North America.
'The pressure is unbelievable,' said a vice president at a major supplier involved in direct talks with the Chrysler group. 'The whole idea of partnering is not as strong as it used to be.'
The partnership with suppliers was a key ingredient in the former Chrysler Corp.'s renaissance in the 1990s. It produced dramatic cost savings, and suppliers often gave technology to Chrysler first.
Those days are gone. Global competition was growing even before DaimlerChrysler announced on September 26 that it would report a $600 million loss at its Chrysler group in the third quarter.
The automaker is in trouble. It is paying out huge incentives to increase sales. High launch costs this year for a new generation of minivans and mid-sized cars increase the pressure.
Standard & Poor's, the credit rating agency, said on October 11 that its outlook for DaimlerChrysler had moved to 'negative' from 'stable' in light of troubles at its US unit. Its debt rating was unchanged, but could slip if cost-cutting and new product introductions did not strengthen its earnings.
The company is now leaning on its suppliers. But parts makers say they may not be as willing to sacrifice for the Chrysler group as they were in the past, according to interviews with supplier CEOs.
A Chrysler group executive does not deny the new pressure.
'We are under enormous cost pressure, this is a tough industry,' said Jeffrey Trimmer, the Chrysler group's director of operations and strategy for procurement and supply. 'This is not a happy country club where suppliers give us 5 percent savings and get a plaque.'