Restructuring The Balance Sheet Doesn’t Change The Culture

There was certainly no transformation of culture at the Tier 1 suppliers  coming out of Chapter 11. Despite all the special consideration, debts released, and government largesse received by these companies, the arrogance is still there.

Here’s an excerpt from a  Tier 1 letter sent to a machine shop not too long ago:

“Prior to and during the course of “Company’s  name here” Chapter 11 filing, many suppliers demanded shortened payment terms. These terms were granted solely to protect “Company’s name here” supply and to ensure uninterrupted deliveries to our customers. Given “Company’s name here” planned emergence by the end of this quarter, shortened terms are no longer appropriate or justifiable.

“Since you have refused 

My Terms. My way. Take it or leave it supplier.

My Terms. My way. Take it or leave it supplier.

to return to standard payment terms, “Company’s name here” will seek all available remedies, which may include seeking legal redress, or pursuing alternative sourcing solutions if arrangements acceptable to “Company’s name here”  are not completed…

How nice of  “Company” to grant us shortened terms while they were under the protection of the bankruptcy court.

How nice to still try to unilaterally dictate terms to your suppliers.

Terms are granted,  by suppliers, when appropriate, to reward or incentivize creditworthy customers for prompt payment. They are not an entitlement established by arrogance, demand, or corporate pedigree.

We are not surprised that the same pre-bankruptcy arrogance and supplier abuse  remain well entrenched in the Tier 1’s Purchasing Departments. Why would we think cash infusions of billions of dollars and special treatment by the court system would change that?

If the financial restructuring didn’t change the culture, what will be different about doing business with the Detroit companies and their Tier 1’s in the future?

According to the letter I saw, nothing has changed.

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