Topic: Toyota Partmakers in Japan Hire Detectives

[MKII]

May 1 (Bloomberg) -- Hironori Minezawa, a private detective, spends his days investigating struggling autoparts makers in Toyota City, Japan, as cuts by Toyota Motor Corp. end a 7-year expansion for the city’s thousands of parts suppliers.

Toyota slashed production following the automaker’s first loss in 59 years, pushing some partsmakers into bankruptcy. Minezawa said he is employed by Toyota suppliers to find out whether subcontractors may fail, leaving his clients unable to fill their own orders.

“A rumor of a possible bankruptcy gets out, and we are called in to find out what’s going on,” said Minezawa, who works for Tokyo Shoko Research, based in nearby Nagoya. “These companies aren’t getting any work and are at the end of their tethers.”

Failure of the weak links in the chain may force Toyota to turn to suppliers outside its traditional network, ending the company’s stranglehold over a procurement system that has driven down profit margins at subcontractors to 1 percent or less, said Takeshi Miyao, a Tokyo-based supply chain analyst at CSM Worldwide, which advises the auto industry.

“This would change the balance of power and could become reflected in prices,” Miyao said
source http://tiny.cc/QfPAU

[Erik]

Less than 1% profits??? Holy crap!
There is going to be a bloodletting in that industry if the recision continues.

[toolatecrew]

All automakers in US and Japan have been squeezing their suppliers for years. Cutting their margins ,extending payment terms etc. Eventually you make it so its not profitable to supply ypou anymore. Once that happens you can't build cars.

OEM part sales are huge profit generators for manufacturers. Methinks they have all squeezed the neck of the golden goose just a little too hard.

[The Mighty Duck]

Sounds like the way Walmart treats its suppliers...  lots of reports of suppliers being pushed into bankruptcy trying to meet Walmart's insane demands.  Pretty disappointing that a company with a reputation like Toyota's would be doing the same kinds of things... 

[toolatecrew]

Sounds like the way Walmart treats its suppliers...  lots of reports of suppliers being pushed into bankruptcy trying to meet Walmart's insane demands.  Pretty disappointing that a company with a reputation like Toyota's would be doing the same kinds of things... 

Walmart does have that reputation but it really isn not a good comparison.

If Walmart pushes Acme widgets to sell at a 1% margin and they go out of business Wal Mart likley also has General Mills Widgets and Post Widgets on the shelf also. The local Walmart store doesn't skip a beat if they push Acme Widgets too hard. Yes Walmart as a company may get .00001% less profit becuase they now replace the Acme sales where they made a higher margin with Post sales but as an overall effect its not much. Walmart may be a the biggest single customer for many consumer products but consumer products like Toothpaste DVDs etc are so widley sold that even being the biggest is only % points of Total sales. Even in areas where they have a rediculos share like DVDs the best estimate is that they sell 30%.

If company XX squezzes their supplier for XXX bumpers too hard and forces them out where do they get their XX bumpers from? If they cen't get bumpers how do they build cars. My point is that Auto Companies are much more verically integrated and dependant on a single supplier. They are much more vunerable to the consequences of supplier failure than Wal mart .