Chip McClure, ArvinMeritor Inc chairman, chief executive officer, and president, said recently that the supplier industry is "in crisis" and a "state of urgency, if not in a state of emergency." But, he added, collaboration with suppliers, OEs, joint ventures, competitors and universities can ease the situation.
McClure made the comments November 9 at the Original Equipment Suppliers Association (OESA) annual conference in Dearborn MI, according to ArvinMeritor information.
"Collaboration can improve cost savings, quality of innovation, as well as how much we spend on innovation," he said. "It's all about cost savings and value creation...We recently entered into a partnership with one of our key competitors, a rival with the same product lines. They needed a product that we produced at a lower cost and in a timely manner, and we had an under-utilized plant. The end result was that they didn't have to make a capital investment to get their product, and we increased our revenues and efficiency. It's a win-win for both of us...We need, more than ever before, to embrace collaboration, to rid the organization of the 'not invented here' mentality because there is a great deal of value in taking advantage of existing inventions and information. Egos have to be checked at the door."
McClure said the industry must change its mindset and "first master the art of abandoning products, services, and processes whose time is past....Change forces us to become more productive, more inventive, and ultimately more profitable. We must change or perish. It's no longer working the old way, so we need to embrace change and try something new.
"For too long we've failed to accept full responsibility for our failures. It's time we stopped pointing the finger at our customers, steel prices, union wages, and the host of other excuses that we've accepted as facts of life about our industry. If these factors are so out of whack that they are causing our failures, shame on us for allowing it to happen."
He said the industry should develop and implement multiple, on-target strategies, which will facilitate and enhance change. These initiatives include:
•Diversifying the customer base.
•Increasing revenue growth and margins through innovative technology to create higher value.
•Expanding business globally, both regionally as well as with global customers in the United States.
•Develop effective plans to manage costs, including a low-cost manufacturing footprint, and sourcing from low cost competitive countries.
•Sustain a strong balance sheet, including generating cash, improving liquidity and lowering cost to capital.