DETROIT -- In his first major public move since starting his new job, General Motors Co.'s purchasing chief signaled that he won't be as confrontational as his predecessor, Bo Andersson. Bob Socia, who took over in June as vice president of GM's global purchasing and supply chain, told his largest suppliers during a regularly scheduled teleconference that the automaker will allow partsmakers to pocket a greater share of the savings they generate, a GM spokesman said.
GM now will split any cost savings with suppliers 50-50 for the life of the part. Under the previous plan, GM received 65 percent of any cost savings from suppliers for the first year that the savings were realized, and suppliers received 35 percent. After that, GM kept all the savings in the form of reduced prices.
The move seeks to generate more cost-cutting ideas from suppliers.
"We think this decision will help generate enthusiasm in the supply base for doing business with the new GM," spokesman Dan Flores said. "This is an example of finding ways to engage our suppliers in ways that we have not done before."
Flores said GM expects to come out ahead despite taking a smaller share of the savings. He said it is too early to put a number on the program's savings.
GM's European operations did poorly in the annual Automotive News Europe/SupplierBusiness OEM-Supplier Relations Study conducted in May and June. Supplier executives who answered the survey said that GM Europe makes the most demands on suppliers to reduce price and ranked it last in providing a good return on investment. GM Europe also also scored poorly for protecting suppliers' intellectual property and for honoring agreements on price.
Douglas A. Bolduc contributed to this report