Supplier markets are evidently feeling the impact of a renewed wave of cost-cutting demands from their key customers. And, once again, it is the automotive OEMs that are taking the lead. DaimlerChrysler, more of a hesitant player to date, set the ball rolling with its request for lump-sum discounts of 5% over the next three years, for a total of 15%. Similar reports are circulating about Volkswagen, while Ford is said to have requested price reductions of 18%. There is also talk of General Motors planning to remove 160 companies from its supplier list in the US. Meanwhile, GM subsidiary Opel tops the list for price concessions being sought by car makers in Germany and Europe, at 20 to 22%.

Suppliers are not only being confronted by new challenges in Europe and in the automotive industry, however. Reports are emerging from Taiwan of a meeting that Dell, the market leader for computers, reputedly held with its system suppliers and tier-2 suppliers for notebooks (including Foxconn, Flextronics and Nypro). Dell is aiming for a new bidding system for components. This will allow the OEM to gain insight into the price negotiations between system and subcomponent suppliers and eliminate any hidden profits at the tier-1 level.