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Minority Auto Suppliers Critical of Toyota

By Joe Benton
ConsumerAffairs.com

September 29, 2006

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As Toyota closes in on General Motors to become the world's number one automaker, minority auto suppliers in the U.S. are charging that the Japanese auto giant is short changing them.

Meeting at the Rainbow/PUSH seventh annual automotive symposium, minority suppliers were more disapproving of Toyota than Detroit automakers. The suppliers insist however that neither the Detroit Big Three or Toyota spend enough with minority companies.

While Detroit continues "lackluster spending with minority businesses," Toyota has not met with minority auto leaders in several years. "Now that is a stiff arm," said Jesse Jackson, president of Rainbow/PUSH.

Toyota spent $1.1 billion with minority suppliers in the U.S. last year compared with $5.6 billion by GM and the GM expenditure is a 15 percent decline over the previous year. Bo Andersson, GM's vice president of global purchasing, agreed that GM can do better on minority supplier spending. "We can never do enough," he said.

"As Toyota continues to take market share from our customers, it hurts us," said Dave Bing, chairman of a steel-processing and stamping supplier based in Detroit that produces parts for the auto industry.

The frustration among minority auto suppliers demonstrates the strain of global competition on the U.S. auto industry as well as its suppliers. Competition from Japanese automakers already has forced U.S. automakers to reopen some labor contracts.

Toyota, Honda and Nissan accounted for $22.6 billion, or 58 percent of the worldwide auto industry's profits last year. The competition is now affecting the amount of money Detroit automakers spend on minority suppliers and the Asian giants are not taking up the slack with minority firms.

Toyota is targeted because it is selling more vehicles and making more money than any of the other automakers, according to Jerome Miller, Toyota vice president of diversity and inclusion.

"More people want to do business with us," Miller said at the symposium. "We welcome that."

Miller said that Toyota has hired a diversity consultant to explore ways of improving its spending with minority suppliers, and growing its business at the same time.

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