Can Chrysler Get Blood From A Supplier?

The carmaker wants price cuts--but vendors are balking

From the moment he arrived on Nov. 20th, Chrysler's new CEO, Dieter Zetsche, promised bold moves to turn around the struggling auto unit. Now, the German executive, 47, is showing his hand. He has demanded that, beginning Jan. 1, all 9,000 Chrysler suppliers tear up existing contracts and cut prices by 5%. Then, over the next two years, the vendors will be required to squeeze out an additional 10% by redesigning parts and processes. These cost cuts, totaling some $6 billion over three years, are the "major cornerstone of the turnaround," says Wolfgang Bernhard, Chrysler's new chief operating officer and Zetsche's designated cost-cutter.

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