Study Says U.S. Trails Japan on Auto Parts
Despite strong demand for vehicles and record profits for U.S. auto suppliers, American components makers are lagging Japanese suppliers in productivity and quality, according to a major study released Thursday.
The survey of 71 major auto suppliers worldwide found that the Japanese continue to be the global leaders in these areas, even though their domestic operations have been slowed by an economic downturn.
“This should serve as a wake-up call,” said Donald Wingard, the Detroit managing partner of Andersen Consulting, the study’s sponsor. “The message is you can’t be lulled into complacency. You’ve got to keep getting better.”
The results appear to support the claims of Japanese auto makers, who express reluctance to buy U.S. auto parts because of what they say are cost and quality shortcomings among American suppliers.
More than half the $60-billion trade deficit with Japan is linked to autos and auto parts. In trade talks, the U.S. government is demanding that Japan buy more U.S. auto parts and open up their market to U.S. car and parts makers. When negotiations stalled in September, the United States launched a probe of Japanese trade barriers in the sales of auto replacement parts.
Japanese auto suppliers are 20% more productive than U.S. manufacturers and their quality is 30% higher, according to the study, which was conducted by the University of Cambridge and the University of Wales’ Cardiff Business School. The gap is even wider in Europe, where the Japanese are expanding rapidly.
The report indicates that Japanese auto makers are finding ways to take even more costs out of their already lean system. For instance, Toyota is working on a small car about the size of a Corolla that will cost 30% less. The company says such a car could be profitable even if the yen appreciated another 20% against the dollar.
Overall, the study found that parts suppliers worldwide improved greatly in recent years. Since an initial study in 1992, productivity and quality of Japanese suppliers improved 38% and those in Britain 31%. U.S. suppliers were not part of the previous study, but other data suggests they have improved about 25% in the period, researchers said.
“The standard for what is world-class is changing,” Wingard said.
