TRAVERSE CITY -- Chrysler LLC, which has strained relations with some of its suppliers, took the unusual step this week of opening the company's financial books to 160 of them to prove that the Auburn Hills automaker is on sound footing.
John Campi, Chrysler's executive vice president for procurement, spoke bluntly Friday about Chrysler's new approach to dealing with suppliers, saying it wants good relationships but can't prop up failing companies.
He also warned that suppliers seeking cash on demand would be met with resistance.
"If a supplier wants to push us because of their fear, then they're violating the contract that's in place and I will take the necessary actions," Campi told reporters on the sidelines of the Management Briefing Seminar. "I have had suppliers come to me with a gun to my head and I say, 'I am not going to let you shut down production, but if you are serious then you have to live with the legal consequences.' And the legal consequences are not the end of it because if somebody does that, I can tell you they will not be a supplier of choice."
Since becoming a privately held company last August, Chrysler is no longer required to make its financial records public. Analysts have said Chrysler's secrecy makes people suspicious of the company's status and creates greater risk for business partners, such as suppliers and dealers.
Chrysler has responded in recent weeks by releasing limited information about its finances. The company says it has $11.7 billion in cash and securities on hand, and had in the first half of this year $1.1 billion in earnings before interest, taxes, depreciation, amortization and restructuring charges -- a number that indicates cash flow but not net profit or loss.
On Friday, Campi said the 160 suppliers visited Chrysler's headquarters Thursday to hear from the automaker's chief financial officer, the second time in about a month that suppliers were brought in for such a presentation.
"We did a complete financial review, balance sheet, earnings performance, you name it, we covered it. Not too different from what I've seen in publicly traded companies," Campi said. "I think the mood was very upbeat."
A survey of suppliers' feelings toward automakers by Birmingham-based consultant Planning Perspectives ranked Chrysler last among its peers.
Campi stressed several times during his speech at the Center for Automotive Research's annual event and afterward that he wants to improve Chrysler's relationship with suppliers.
"I am not looking to kill suppliers," he said. "But there are some I can't save."
Chrysler's goal is to reduce supply chain costs by 25% within three years. Part of Campi's new approach is launching a so-called supplier of choice program in which fewer than 10 suppliers will be given business without having to competitively bid each job. The suppliers in turn will become partners in the development for vehicles they supply.
Japan-based Denso was recently picked as the first supplier for the program, Campi said. "They don't have everything in the vehicle" involved, he said. "I can tell you they have a footprint in the vehicle."