Half of Ford's Suppliers Bite the Dust

Bertel Schmitt
by Bertel Schmitt

Ford had 1,683 suppliers last year. By the end of this year, that number will be down to 850. This is what Tony Brown, Ford’s group vice president of global purchasing, told reporters, one of them from Reuters. Ford is worried about disruptions by supplier bankruptcies, which are a daily occurrence. Triage time: Ford wants to shore up the healthier ones and leave the not so healthy by the wayside.

“We’ve accelerated our efforts in this regard to try to rationalize the supply base in order to get to profitable growth for all,” Brown said. “There is simply too much capacity in the system. We don’t need that capacity.”

Mass mortality of large suppliers would wreak havoc amongst all automakers manufacturing in North America, including Ford, Toyota and Honda. The supply base is highly intermeshed. Big suppliers are typically served by a large number of subcontractors. The fallout could snowball.

“The next three to four months are going to be critical as GM and Chrysler try to come back up,” Brown said. “As to whether the supplier base will be able to effectively respond to that … we’ve got a critical window here.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Islander Islander on Jun 24, 2009

    Will having less suppliers mean that the remaining suppliers will have more leverage on pricing, thereby getting more dollars for their products? The result is that the suppliers will have more power over Ford?

  • Harrycase2000 Harrycase2000 on Jun 24, 2009

    Perhaps Ford has decided to make money by selling vehicles instead of beating up vendors. Focus on value to the customer requires vendor partners who will work to reduce costs not just cut prices. Getting vendors to accept responsibility for real quality improvement requires a system that rewards them with more business for this effort It is one of the key elements of the Toyota Production System

  • Lw Lw on Jun 24, 2009

    Wow... That's a lot of suppliers biting the dust... Thank god we spent all those billions to save auto jobs. That's why we did it right? I get so confused.....

  • Karakuji Karakuji on Sep 28, 2009

    i can´t remember i gave you the permission to use my picture in that article.