How Are OEM - Supplier Relations Today?

Annual Study of Rocky OEM - Supplier Relationship Mailed to Supplier Executives

BIRMINGHAM, Mich., Feb. 20 -- Are automakers living up to their public promises to improve relations with their suppliers, or is this merely OEM rhetoric to mollify suppliers and the news media?

The industry will know for sure in a few weeks when suppliers respond to the 2003 OEM Benchmark Survey mailed today to more than 400 industry executives.

Participating companies typically represent the majority of the Top 100 Tier I suppliers and about half the annual buy of the six major North America OEMs -- Chrysler Group, General Motors, Ford, Honda, Nissan and Toyota. The annual study benchmarks the OEMs' relationships with their suppliers and is conducted by Planning Perspectives, Inc., in Birmingham.

Last year's survey found that Toyota and Honda continue to set the standard for supplier-OEM working relationships. Other important findings included:

   *  Suppliers rank Honda and Toyota as the best OEMs with whom to conduct
       business

   *  Honda and Toyota balance quality with price when working with their
       suppliers while the domestic OEMs stress price significantly more
       than quality

   *  Detroit's Big Three have practices that hinder the suppliers from
       doing their best job in meeting the OEMs' price reduction and quality
       improvement expectations

   *  Domestic OEMs go about demanding price concessions from their
       suppliers in a manner that shows little concern for the suppliers'
       economic viability or supplier working relationships, while Honda and
       Toyota price reduction demands are conducted in manner that
       demonstrates concern for both

"Given the domestic automakers' public comments about how much they value their suppliers, it will be interesting to see if anything has really changed," said John Henke, president and CEO of Planning Perspectives.

Information gathered from 14 major product groups form the backbone of the study, which includes the following areas of focus:

   *  Determining specific price reduction demands, by individual OEMs for
       their major product groups
   *  How suppliers responded to these demands
   *  The impact of price reduction demands on supplier margins
   *  What suppliers are doing to maintain profit margins
   *  Supplier perceptions of the OEM's supplier selection process
   *  Suppliers' evaluation of each OEM in terms of trustworthiness,
       fairness and honoring contracts

The overall results of the PPI study will be presented at an Original Equipment Suppliers Association (OESA) meeting in late spring, with detailed results to be made available to interested suppliers in April.

In addition to considering specific supplier responses to these OEM business issues, the study provides insight and information about how suppliers can develop effective sales and financial strategies for specific product groups at each of the OEMs.

About PPI

For the past 13 years, PPI has specialized in in-depth surveys of automotive suppliers for the OEMs and some Tier 1 suppliers. In 2001, PPI reversed its approach to determine supplier perceptions of the OEMs. These studies have become benchmarks and critical sales and financial planning tools for suppliers and their sales, marketing, and financial staffs, as well as a means by which OEMs and their purchasing staffs can get a reality check on their relationships with suppliers.