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GM, Suppliers Meet on Lowered Budget

GM meets with suppliers to discuss cost targets and amend relationship during its tough time.

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Bo Andersson, purchasing vice president of General Motors told the automotive supplier industry at a closed-door meeting in Dearborn, MI "Stick with us." According to reports, GM is meeting with suppliers to hammer out cost targets under a three-year plan to trim its $85 billion annual purchasing budget. The latest cuts would mean more price reductions and penalties from an already struggling industry.

In recent years, GM’s relationship with its 3,200 suppliers has bordered on combative. An industry survey, taken last year reported relations between GM and its suppliers had fallen to a 15-year-low. The embattled automaker, still the largest in the world, has driven down prices and pressured some suppliers to go offshore, in low-labor cost countries such as China, India and Honduras.

As GM struggles to rebound from more than $4 billion in losses in North America, GM, some suppliers believe that the automaker will seek deeper price cuts on parts and materials.

According to reports in the Detroit News, GM's vice president Bo Andersson asked members of the supplier group Original Equipment Suppliers Association for patience through the current rough period, betting that its new line of full-size sports utility vehicles and other vehicles launching in 2006 will be money-makers.

To make amends, and with promises of rewards, Andersson asked for feedback on its latest strategies and initiatives from suppliers. Several members of the GM purchasing staff attended the meeting and responded to individual supplier concerns after the speech, according to a GM spokesman.