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CHICAGO (Reuters) - General Motors Corp.'s relationships with its U.S. parts suppliers, never particularly cordial, have worsened, a study released Tuesday has found.

Suppliers gave GM (Research), struggling to stem market share losses, lower marks for timely and candid talks with parts makers than last year, according to the annual study by consulting firm Planning Perspectives Inc.

"General Motors' supplier working relationships are now clearly and unequivocally the worst they have ever been," study author John Henke told Reuters in a telephone interview.

"The level of trust that suppliers have of General Motors is at the lowest we have seen in 15 years of doing this," said Henke, chief executive of Planning Perspectives.

GM was the only auto manufacturer in the study -- which includes Ford Motor Co. (Research), DaimlerChrysler (Research), Nissan Motor Co. Ltd., Honda Motor Co. Ltd. (Research) and Toyota Motor Corp. (Research) -- that suppliers did not rate at least modestly more trusted than it was in 2004.

"We know that it is increasingly difficult for suppliers to meet with people at General Motors, so I suspect that contributes to the concern here in that they can't get to them to get the kind of information (they need)," Henke said.

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Let me also add this article on the same topic. It goes into a little more detail:

Detroit News Auto Insider said:
GM-supplier relations erode

Manufacturers say automaker doesn't care about their financial struggles.

By Christine Tierney / The Detroit News

General Motors Corp.'s relations with suppliers have deteriorated markedly over the past year, with components manufacturers complaining that the automaker is driving hard for price reductions without taking into account their own financial hardships.

An annual survey of 259 major suppliers conducted by Birmingham-based consulting firm Planning Perspectives Inc. found they prefer dealing with Japanese automakers and are shifting resources accordingly to gain more business with the thriving transplants.

On a scale of 0 to 500 -- with zero being very poor and 500 being very good -- the survey rated GM's overall relations with its suppliers at 114, down from 144 last year, while Toyota Motor Corp.'s relations improved to 415 from 399.

Of the six companies ranked, Ford had the second-poorest relations with suppliers (157), followed by the Chrysler Group (196), Nissan Motor Co. (298) and Honda Motor Co. (375).

Compared with last year's survey, Ford's and Nissan's scores were little changed, while Chrysler's improved. GM showed the sharpest decline.

"One thing that's apparent this year is that GM seems to be focused on getting as much money from its suppliers without regard to their financial stability," said John Henke, president of Planning Perspectives.

"We acknowledge that we do need to work on improving communications with our supply base, and we're working to hear their concerns," GM spokesman Tom Wickham said.

But he said GM relied more on direct feedback from its suppliers in regularly scheduled meetings than third-party surveys.

Ford spokesman Joe Koenig said the automaker also was working to strengthen ties with suppliers.

"In today's economic environment, achieving lower costs and improving quality requires an unprecedented level of cooperation and strong relationships with our suppliers," he said.

Relations between Detroit's automakers and suppliers have been strained since 2002, according to the survey.

The gap has widened over the years between their scores and those of their financially stronger Japanese rivals.

GM and Ford anticipate a sharp drop in profits this year and are counting on suppliers to help them cut costs. But suppliers also are grappling with high steel and raw material costs. Several major firms, such as Tower Automotive Inc. and Collins & Aikman Corp., have sought bankruptcy protection this year.

According to the survey, only 3 percent of respondents rated their working relations with GM as good or very good, compared with 63 percent who felt that way about Toyota and 53 percent for Honda.

In addition, 9 percent considered GM a "very or most preferred" customer, while 73 percent viewed Toyota that way.

As a result, suppliers were more likely to shift resources -- such as capital outlays, research and staff -- toward the Japanese automakers.

"The pattern is there -- year over year, suppliers are doing less for domestic automakers than in the previous year and more for the transplants," Henke said.

"Suppliers see the greatest opportunities with Nissan, Honda and Toyota -- and also Chrysler, interestingly enough," he said.

Helped by the popularity of the Chrysler 300C sedan, Chrysler has been gaining market share in recent months, unlike its bigger Detroit rivals.

Chrysler spokesman David Elshoff said the automaker, a division of DaimlerChrysler AG, sets global benchmarks for components. But "we try to be open with our suppliers, we try to communicate with our suppliers, we try to let our suppliers know what our expectations are and listen to what their expectations are of us."

The survey found cost seemed five times more important for GM than quality when selecting suppliers. In contrast, cost was 1.5 times as important as quality for Toyota.

GM disputes the implication. "If you look at our performance last week in J.D. Power and Strategic Vision" -- where GM quality was rated highest among U.S. automakers -- "we have improved quality with the help of the supply base," Wickham said.

Among the Japanese, Honda's scores dipped compared with last year, to 375 from 384, because of its tougher scrutiny of costs. For more than a year, Honda has lagged its Japanese rivals in U.S. sales growth.

"Honda is becoming very concerned about the cost of products," Henke said. "Toyota has better control over costs."

But suppliers rated Honda as the automaker they trusted the most.

Honda and Toyota also seem most aware of suppliers' hardships, the survey showed. "They're very much concerned with the long-term financial stability of their suppliers. It goes back essentially to their idea that they've chosen suppliers for life," Henke said
From what I have seen, whenever an automaker demands cheaper parts from suppliers, they pay a price in quality. Although anecdotal and not necessarily representative, my experience with mid 1990's GM vehicles have not been good, and GM had been demanding cheaper parts from suppliers during this period. Essentially, components seemed to wear out and need replacement earlier than on older GM vehciles.

I hope this bad relationship doesn't sink GM back into using less reliable parts again. It seems like they are just now pulling out of those quality problems from the last decade.
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