Partsmakers worry about BMW cuts

Klaus-Dieter Flörecke, Automotive News Europe

Munich, Germany -- A suggestion by BMW's works council head, Manfred Schoch, that the relationship between suppliers and automakers needs to be “redefined” has alarmed supplier executives.

“We've noticed that many suppliers, such as Conti, Bosch, Magna or ElringKlinger, generate better returns than we do,” Schoch told Auto Motor und Sport last month.

Schoch is deputy chairman of BMW's supervisory board as well as its senior labour representative.

German media reports have interpreted Schoch's remarks as pressuring suppliers for further price concessions.

In response to Schoch's comments, ElringKlinger CEO Stefan Wolf said: “In my view, it is alarming when someone on the union side criticises suppliers for making a sufficient profit.”

Bosch official worried

IG Metall officials expressed “amazement and dismay” at Schoch's comments. In a letter to Schoch, officials said they found it “unbelievable” that he is putting suppliers under more pressure.

“Automotive suppliers today are under enormous pressure from manufacturers and are subject to their control,” union representatives wrote. “When they still manage to show a profit, they do so thanks to their ability to innovate and the good work of their employees.”

The letter was signed by Gert Bauer, who heads IG Metall in Reutlingen/Tübingen. Bauer's region, which is near Stuttgart, is home to many German automotive suppliers.

Manfred Rupp, ElringKlinger's works council chairman and Daniel Mueller, works council chairman at Robert Bosch in Reutlingen, were also co-signatories.

Schoch says his remarks have been misinterpreted. His comments related to the need to configure automaker-supplier cooperation more effectively along the value chain, he said.

“For my part,” he said, “the statement wasn't about putting pressure on suppliers.”

CEO Norbert Reithofer wants to raise BMW's operating profit to between 8 percent and 10 percent by 2012 from about 5.5 percent now, in part by reducing costs by €6 billion a year.

Analysts assume that a large part of the savings would come from purchasing.

From Automotive News Europe (A Crain publication)