Japanese Auto OEMs Prefer Supplier Localization to LCCS

I liked this analysis in the Detroit Free Press about how Japanese automotive OEMs are increasingly localizing their supply base in the US, while GM and other US producers search for low cost country sources of supply. According the article, "A Free Press analysis of federal data found that vehicles built by Detroit automakers have steadily increased their proportion of parts from outside the United States and Canada. By the same measure, vehicles built in North America by Japan's largest automakers increasingly use U.S. and Canadian parts ... some popular Japanese models now surpass their U.S. competitors for content made in the United States or Canada, the government records show." According to the article, Toyota now spends $20 billion annually with North American parts suppliers, a number up nearly 400% from a decade ago. As an outsider looking in, I find it fascinating that as GM and Ford look to cut costs in their supply chain by focusing on getting piece part prices down from global sourcing, Toyota and Honda are following the same "partnering" strategy with local, strategic suppliers that they pioneered in their home market. Indeed, according to the article, Toyota is even taking equity stakes in a handful of key suppliers in the US market.

Jason Busch

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