Post by David ZPost by johnCan Toyota and Lexus get any cheaper?
John "The Ass" Dole, could you get any dumber? I don't think so.
The US car companies have been doing this to their suppliers for at least
25 years.
This is not a new thing for Toyota either. Back 10 or more years ago Sixty
Minutes did a piece on how Toyota operates in Japan. One of the things that
struck me was how tough Toyota was on its suppliers. A few years back Ford
got so aggressive on demanding price reductions that some suppliers refused
to do business with Ford. You can only press your supplier so far. They are
not in business to give parts away.
Most companies operate in the same way. I know where I work they press
suppliers for cost reductions every year. Sometimes this is done without
affecting quality, but sometimes I have seen some very bad results when
suppliers are pushed too far (poor quality, supplier going out of business,
reduced content, production moved to China, etc). I can't see anything wrong
with working with suppliers to reduce costs, but I think there can be
problems when a company attempts to mandate yearly cost reductions without
the proper consideration. I find it hard to believe that many of Toyota's
suppliers have such high profit margins that they can cost costs by 30 to
40% without making drastic changes. If they can, then the Toyota procurement
team was doing a poor job. Most companies have cost estimators that are able
to determine a fair price for a part within a few percent. In order to get
cost reductions of 30%, I'd assume Toyota will be changing from Domestic
(Japanese) and US suppliers to Chinese suppliers - or expecting their
suppliers to make the switch.
You can be sure of one thing - Toyota won't be reducing the selling price of
cars and trucks by 30% to 40%.
Ed