By David Sedgwick, Automotive News
Traverse City, Michigan -- Ford Motor Co. is steadily giving more business to preferred suppliers in its Aligned Business Framework, Birgit Behrendt, executive director for global programmes for Ford's purchasing operation, said this month at the CAR Management Briefing Seminars.
Suppliers in this group eventually will account for 65 percent of Ford's $50 000-million global parts budget, up from about half today, Behrendt said. She did not indicate how soon that shift will occur or whether Ford will add more suppliers to its preferred list any time soon.
Ford also is placing a higher premium on the stability of its supplier network, Behrendt said at the seminars. The company is de-emphasising auctions, which became popular in the recent past to get the lowest possible price for a component.
Sigmund Huber, Chrysler Group's senior director of purchasing, said suppliers are increasingly stable, having staged a dramatic financial comeback.
In June 2009 Chrysler purchased nearly 28 percent of its parts from suppliers that were listed as "risk" or "high-risk" suppliers. This past June that percentage fell to just 3 percent, according to Huber's data.
And the average Chrysler supplier's liquidity has improved by 20 percent since 2009, he said.
"Based on the data we received, the worst is certainly behind us," Huber said. "Suppliers have been able to deal with their fixed costs so they are profitable" at lower industry sales rates.
Still, many suppliers must refinance their debt over the next 12 to 24 months, Huber cautioned. It is not yet clear how much confidence lenders have in the auto industry or in individual suppliers.
"There will be a lot of refinancing" of expiring loans, Huber said. "We'll have to see the fallout from that."
Chrysler's suppliers are rebounding at a time when the automaker is trying to patch up relations with them. This month Chrysler plans to issue a new standard contract for vendors, Huber said.
The company has also taken a number of steps this year to speed up payments to vendors, improve communications and reward suppliers that slash warranty costs.