In a recent blog post , I pointed out why automotive OEMs should play nice with their suppliers. Automotive customers have long been known as “difficult” for suppliers, given the OEMs’ penchant for fixating on price.
Other industries, including medical and aerospace, seem to have taken a page from the automotive OEMs’ playbook over the years. An article in the August 3 issue of the Wall Street Journal noted that Boeing is nearing a settlement of “one of its thorniest supplier issues” by provisionally agreeing to a discount-promising, long-term deal for plane parts with Spirit AeroSystems Holdings Inc.
Spirit makes fuselages, large wing structures, engine nacelles, fan cowls and more using both composite materials and metals, and it is Boeing’s biggest supplier, said the WSJ article. Yet negotiations between the two companies have been “contentious at times as the two sides sparred over parts pricing.” Spirit said in April that “there was a significant gap on terms,” but as of last Wednesday, a “breakthrough” in talks had been achieved. Boeing called it an “important step forward in its Partnering for Success program in which the plane maker has asked suppliers for concessions in return for work.” (I’m sure that means price concessions.)