From Detroit Free Press

Automotive suppliers, already bearing customer production cuts, spent Wednesday calculating what DaimlerChrysler AG's plan to make fewer vehicles and reduce vehicle platforms would mean to their operations.

But Chrysler's restructuring plan reveals that not all suppliers will be affected the same. In some instances, Chrysler will consolidate operations that may hurt suppliers. Elsewhere, it will invest billions that may benefit suppliers.

Chrysler Group President and CEO Tom LaSorda announced a target of adding at least $5 billion to low-cost sourcing.

"Some of which is the natural result of adding suppliers to support our global growth," LaSorda said of operations in Mexico and China. "But it will mean we will also be working with existing suppliers in our own backyard."

LaSorda has a goal of saving $4.5 billion over the next three years. Material cost cuts will account for $1.5 billion of that savings, which ultimately comes at the suppliers' expense, said Chuck Moore, managing director of Conway MacKenzie & Dunleavy, a Birmingham-based turnaround firm.

"It more or less reinforces that suppliers are going to be faced with givebacks and price-downs going forward," Moore said.

Chrysler's plans to cut production by 400,000 vehicles a year has a direct impact on auto suppliers.

Two of Chrysler's top seat suppliers, Milwaukee, WI-based Johnson Controls Inc. and Southfield, MI-based Lear Corp., said Wednesday they do not know how they will be affected.

"Typically, when actions are announced by our customers it's not easy to pinpoint the exact impact on us," said Lear spokeswoman Andrea Puchalsky. "It takes time to analyze what their plans are."

But some suppliers may benefit, like Japanese auto supplier Denso Corp., which supplies Chrysler with power train systems. Chrysler said it will invest $3 billion in fuel-efficient engines, transmissions and axles, which will set the table for more than 20 new and 13 refreshed vehicles through 2009. Denso spokeswoman Marlene Goldsmith said company executives were meeting Wednesday to determine how they will be impacted.

"If you're a top-notch powertrain supplier, you really stand to benefit with this announcement," Moore said. "However, at the same time, because of the continued consolidation of powertrain platforms, there are suppliers that will be left out."

Dave Andrea, vice president of business development at the Original Equipment Supplier Association, said in a Monday interview that as automakers move toward global platforms and begin consolidating platforms to cut costs, auto suppliers will suffer.

LaSorda said Chrysler is reducing its number of vehicle platforms -- an architecture from which a wide variety of vehicles can be built -- from 12 to seven by 2012.

"There will be immediate cost pressures," Andrea said. "There's only so much you can do around a redesign. You can't resource parts in the middle of a model year."

LaSorda said that Chrysler's new family of V6 gasoline engines, dubbed "Phoenix," will be built on a single architecture, which will mean moving from its current four six-cylinder engine groups to one engine group.

Goldsmith said Denso has a strategy for coping with an automaker's ever-changing production decisions.

"We don't set up a plant just for Chrysler," Goldsmith said. "So when there's a downturn at one customer they usually shift people to the other lines so everybody keeps working."

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