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New conclusions from supplier data

by Bill Cawthon on

Working-Relation-Web

The headline of an article in today’s Detroit News reads: “Big 3 still trail Japanese in supplier relationships.” In the article, Melissa Burden reported on the 2014 North American Automotive-Tier 1 Supplier Working Relations Index study (WRI), released by Planning Perspectives Inc. of Birmingham, Michigan.

The chart shows data from 2009 to 2014; Detroit automakers did experience a slight drop from 2013 to 2014 in how they are viewed by top suppliers, while Honda, Nissan and Toyota improved. Chrysler’s score dropped 2.0% from 250 to 245; Ford fell 1.5% from 271 to 267 and GM’s rating fell 2.8% from 251 to 244. Honda, in the meantime, rose from 287 to 295, a gain of 2.8%; Nissan’s score gained 6.6%, advancing from 256 to 273 and Toyota was the only carmaker to break the 300 level, going from 297 to 318, a 7.1% improvement.

Burden wrote that John W. Henke, Jr., the CEO of Planning Perspectives Inc., said: “After several years with not much movement, the domestics’ supplier relationship scores have slipped, while Japanese companies’ scores have improved….”

Planning Perspective’s own data, though, shows that recent years have been anything but lacking in movement; scores for Chrysler, Ford and General Motors have improved and those for Honda and Toyota have dropped significantly since their glory days earlier in the last decade.

Looking just from 2009 to 2014, Chrysler’s score has risen 51.2%, the highest growth rate of any of the six major automakers. General Motors has gained 33.3% and Ford has advanced 15.1%. Nissan is the only one of the major Japanese players to show growth over that period, and its growth rate was just 1.9%. Meanwhile, Toyota’s score has fallen 6.2% and Honda’s has plunged 15.5%.

Planning Perspectives has performed their study since 2002, so Allpar mapped that data and found some surprising trends.

From 2002 to 2007, supplier relationships with Chrysler, Ford, and GM were significantly below the leading Japanese companies, reaching their depths in 2005, when GM’s supplier relations were at an almost poisonous 114 and Toyota’s peaked at 415.

In this period, Chrysler had the best relationships of the hometown gang. This continued until Cerberus Capital Management acquired Chrysler from Daimler in 2007. Within a year, Chrysler’s relationships had fallen to their lowest level since the WRI study was inaugurated in 2002 and remained at the bottom of the barrel until the company emerged from bankruptcy in 2009.

From 2009 to 2012, under the leadership of the late Dan Knott, Chrysler rehabilitated supplier relationships and its score went from 162 to 248, a gain of 53.1%. Chrysler’s score peaked at 250 in 2013 before dropping to 245, a point ahead of GM, in this year’s report.

From 2009 to 2013, all three Detroit automakers steadily improved their relationship scores while all three of the Japanese car companies saw their scores decline as the two groups ratings converged from a 301-point spread in 2005 to a 47-spread in 2013. The gap opened slightly in 2014, but one year does not a trend make.

In recent years, Chrysler, Ford and GM have posted their best scores since Planning Perspectives first issued the WRI. Even with the dip in the latest edition, their scores are better than any they received prior to 2011. On the flip side of this, Honda got its worst score in 13 years just last year, while Toyota did the same in 2012. Nissan bucked the trend by getting its worst score in 2002, the first year of the study.

It seems a shame that a Detroit newspaper and a Detroit-area analyst gloss over the strides Chrysler, Ford, and GM have made, to focus on a single year as if it forecast future performance.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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