Ford Seeks Supplier Concessions
While GM touts its less-than-revolutionary “interbuildability” scheme, Ford is approaching global product rationalization from another direction: on the backs of suppliers. Automotive News [sub] reports that Ford is requesting that its suppliers turn over component information to other firms if they are unable to supply a given assembly plant. These so-called “transfer agreements” involve handing over specs and technical drawings to other suppliers, which would then assemble the parts designed by the original supplier. Ford’s supply firms are understandably nervous about the initiative, arguing that it would allow Ford to use competition to squeeze suppliers on price. Also, the possible transfers to overseas firms could allow them to remarket the original suppliers’ designs and other intellectual property to other firms.
Ford’s Tony Brown dismisses such concerns as “paranoia,” telling AN that “because they think it’s unfair doesn’t make them right. It makes that we disagree. And then they get a choice: They can either do business with us or not do business with us.” Brown indicated that original suppliers would be compensated for their designs, but the broadness of these agreements still worry supplier-watchers. “They’re going about doing it the way they’ve always done so,” says John Henke of Planning Perspectives. “And they’re not thinking about how do we do this and ensure we keep the trust we’ve built. That suggests to me that things are improving, but the mind-set isn’t there yet.”
More by Edward Niedermeyer
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If so, ohstapback, then the suppliers who will prosper, will be those working with Toyota. I go to church with a guy just let go from one of the last car parts places in my area (which closed down). Tower. During bankruptcy, such companies are "banned" from trying to obtain new contracts, which are their lifeblood - hence it is best to get out of BK as fast as possible. During this time, Toyota CAME to our town and requested that Tower take on work for them - despite being hundreds of miles from any of their plants; they were that pleased with the prior and current work done. My pal told me that Toyota would send out crack teams to HELP their suppliers when in trouble. 90% of the plant's work was SUV related via GM so it has now closed down and the Toyota work moved to a plant in the south owned by Tower. But the principle is that Toyota are intelligent enough to realize that you treat your suppliers as partners, not as slaves. This benefits ALL, to include Toyota and the ultimate "ALL" in the Toyota system; the end-user (customer/driver of their vehicles). Ever heard of the story about seeing a grizzly bear in the woods? You don't have to be the fastest runner - just faster than the guys next to you, right? So, what is Ford? Ford is the 3rd guy turning around while running and laughing at the fact that grizzlies are eating GM and Chrysler, all the while running straight over a cliff edge because they weren't watching where they were going. With grizzlies waiting at the bottom.
Menno - Ford does work with thier suppliers, quite a bit actually, not only tier one, but tier two as well. And Toyota was smart enough to move thier work to a bankrupt supplier desperate for work that had just had its legacy cost removed and can now produce much cheaper than the previous supplier who still has said costs.
Toyota is not likely to be so nice with their crazy profits turned into crazy losses. Overcapacity and bad economics for what's essentially political gain does not lead to stability or sustainability.