To say that there has been a dramatic change in the U.S. automobile industry in the last decade is an understatement. Where once the Big Three dominated, now over one third of the cars sold in the U.S. are made by foreign companies and cars made by Japanese companies dominate.

The outlook is that fewer cars will be built in the coming years, but more of them will be foreign-especially Japanese makes. As business available from domestic car builders drops off, many metal stampers and fabricators have looked upon the transplant companies as a way to maintain a viable level of operations.

One of the major concerns of U.S. metal stampers, however, is that the Japanese have also in many cases brought over their own suppliers. American companies could then conceivably be competing, not only against each other for business, but also competing against transplanted suppliers brought here by the Japanese O.E.M.s.

It is the custom of keiretsu that raises concerns of many U.S. metalformers and stampers who could potentially supply the Japanese O.E.M. transplants. Keiretsu involves an interweaving of auto manufacturers and their suppliers through stock ownership, interlocking directorates, and joint financial arrangements.

Assessment of U.S. Suppliers

There is another viewpoint, however, and it is that of the Japanese-based companies themselves. A survey was conducted last year that sheds some light on what Japanese transplant companies require of suppliers. In a joint effort between Automotive Engineering magazine and Markey & Associates, a marketing firm based in Grand Rapids, MI, 500 surveys were mailed to specifying influences in Japanese-based companies operating in the U.S. One-hundred seventeen responses were used in the tabulations. Respondents were predominantly engineers/designers (72 percent) and manufacturing production personnel (27 percent).

According to the survey results, 85 percent of the survey participants said they are currently seeking involvement of U.S. suppliers. In general, they expect to increase the number of U.S.-supplied components by 46 percent in the next five years. To access these opportunities, U.S. component makers must target transplant engineers and designers who will make 62 percent of the decisions regarding component selection. According to the report, those U.S. suppliers who invest time and effort in building relationships with the transplant market stand a good chance of gaining market share in the near future.

The report goes on to list several points that are critical to good business relationships with transplant companies. For example, when asked to identify the single most important factor in component selection, over 62 percent of the respondents listed product quality as number one. It is not possible to assume that meeting Big Three specs is proof of quality according to the specifiers.

Sixty-four percent of component specifiers said that price followed quality as the second most important criteria in component specifying. However, transplants view pricing as a mutual decision and will often offer suggestions to cut costs. In fact, many respondents expect prices to drop as suppliers push for more efficiencies. More importantly, the transplant buyer is looking for a long-term commitment from the supplier.

Although specifying authority is slowly shifting to the United States, half of the participants reported that the final component is still approved by Japanese parent companies. To ensure success, domestic component manufacturers must cultivate and maintain contacts in Japan. Sixty-five percent of the decision makers polled prefer to do business with U.S. companies that maintain Japanese offices, affiliates, or professional relationships.

Transplant buying influences place less emphasis on personal relationships than on corporate relationships. Many survey respondents were critical of U.S. sales representatives who seem to care more about getting the order than about the product in question. They said this emphasis on the sale deters U.S. representatives from learning about the transplants' long-range needs and is often interpreted as impatience.

The report also mentions the fact that 74 percent of the respondents' companies require an extensive plant inspection when reviewing potential suppliers. Also, it was felt that many U.S. suppliers lack a critical understanding of emerging electronic technologies.

A booklet, titled "Plain Talk on Selling the Transplants," summarizes the survey of transplant buying influences. One final comment made in the booklet remarks about the American reaction to increased Japanese competition as ranging from raw protectionism to entrepreneurial enthusiasm.

View of U.S. Metalformers

How well do the experiences of U.S. metalformers square with expectations expressed by the transplant companies when it comes to subcontracting work? Is there entrepreneurial enthusiasm or is there frustration with difficult dealings? In order to better assess this situation in the metalforming field, we contacted several companies presently doing business with Japanese automotive companies. Products made by these companies range from hood and deck hinges to fuel tanks to washers to assorted brackets and door hardware. All of these companies are diversified, doing business with domestic auto companies as well as transplants.