DETROIT (May 11, 2010)—The traditional adversarial relationship between the Detroit 3 and their suppliers may be turning toward a partnership, especially at Ford Motor Co.
Meanwhile, suppliers don't hold Toyota Motor Corp. and other Japanese auto makers in the same stratospheric regard that they used to, a supplier survey shows.
If the Detroit 3 can continue to strengthen those partnerships, they will be able to reduce costs, boost efficiency and bring new technology to market faster. “The way the rankings have changed for the Japanese companies and the U.S. automakers is staggering,” said John Henke, CEO of suburban Detroit's Planning Perspectives Inc., which conducts the survey.
“Ford is doing everything right,” he said. “If Ford continues to improve at the same pace, and Toyota continues falling, Ford could surpass Toyota in the near future.”
Tony Brown, Ford group vice president for global purchasing, said: “We are certainly pleased with the progress, the continuous improvement year over year. But to be clear, we have more work to do. We rely heavily on our supply base for technology, so it is important that we have healthy supplier relations.”
Ford began to radically change its ways almost six years ago. It sought fewer suppliers but closer ties with those that it kept.
Ford has risen steadily from last place four years ago to third place this year, above Nissan Motor Co.
General Motors Co. and Chrysler Group sit at the bottom of the rankings. But scores for both rose this year.
“Ford and GM were the biggest winners in this year's study, improving across the board,” Henke said. GM is poised to surpass fourth-place Nissan within a year or two, he said.
Bob Socia, who promptly took steps to improve supplier relations after being named GM vice president of global purchasing and supply chain in June, said in a statement: “We are pleased by the higher scores and the rate of improvement, but we are by no means satisfied.
“It is gratifying that despite our time in bankruptcy, we had the most significant year-to-year improvement of any company in the survey. I am confident we are on the right track.”
Linda Hasenfratz, CEO of powertrain parts supplier Linamar Corp., said, “We have seen a shift at all three in terms of supplier relations—and not just in public statements.”
She praised Ford for being “the first down this road.” But she cautioned that new stresses, including the ramp up of volumes as the industry rebounds, could tempt the industry to “resort to past behaviors.”
“They need to keep an eye on it,” she said.
Honda Motor Co. and Toyota Motor Corp. hold the highest rankings. But their scores have eroded steadily during the recession. Toyota's score dropped sharply in 2008 and has continued to slip.
Toyota's fall came as it canceled production and put a planned assembly plant in Tupelo, Miss., on hold after suppliers had built factories nearby. Then a wave of quality problems, including allegations of sudden acceleration that prompted recalls of 8.5 million vehicles worldwide, further hurt Toyota's sales.
Toyota is acting to reverse the slide, Henke said, “but with the accelerator problem last fall and the additional quality problems, they have to focus on resolving those problems at the expense of improved supplier relations.”