TRAVERSE CITY, Mich. (Aug. 19, 2014) — For five years, Chrysler Group L.L.C. has been slowly rebuilding its once-tattered relationships with suppliers.
Then, in about three minutes last week, CEO Sergio Marchionne called that hard-won trust into question.
Discussing the auto maker's second-quarter results, Mr. Marchionne cast an envious eye on his suppliers' healthy profits.
He said their rich profits in contrast to Chrysler's modest earnings “makes my blood pressure go up.” Then the chief executive vowed that the auto maker would speak with suppliers “to find a way that we can at least participate in their well-being.”
It's hard to say how Mr. Marchionne's comments will affect Chrysler's relations with suppliers, who developed and supply many of Chrysler's most important technologies, such as the Uconnect infotainment system and eight- and nine-speed automatic transmissions. Mr. Marchionne is well-known for making provocative comments that can blow over.
But the comments echoed the bad relations with suppliers that dogged Chrysler and its Detroit 3 counterparts for years.
One top executive of a Tier 1 Chrysler supplier said it takes money and engineers to develop technology, and suppliers can pick and choose which auto makers receive their best work.
“We have learned to say no,” said the executive, speaking anonymously because he had not heard Mr. Marchionne's comments directly.
Neil De Koker, who retired last year as president of the Original Equipment Suppliers Association, said: “Sergio needs to run his company as well as his suppliers are running theirs. He wants to be the customer of choice for suppliers. He wants them to bring their best technology to them, and it will take supplier profitability to develop the technology Chrysler needs to reach the 54.5 mpg fuel standards.”
He spoke at the CAR Management Briefing Seminars being held at Traverse City.