TRAVERSE CITY, MI –Motor Co.’s Tony Brown is known as the hardest-nosed of the Detroit Three purchasing chiefs.
However, he shows a decidedly more compassionate side at the Management Briefing Seminars held here last week as he explains the auto maker’s Aligned Business Framework, a program aimed at developing longer-term mutually beneficial relationships with suppliers – and which appears to be mending’s poor reputation with its vendors.
Pointing out that 30 or more suppliers have gone bankrupt in North America every year for the past several years, with no signs of the trend slowing, Brown asks private-equity owners of struggling suppliers to be patient.
He also urges all auto makers to continue efforts to source from minority- and women-owned suppliers.
“My personal view is that private equity has to be willing to create value from capacity rationalization and not extract it,” he says, adding the investment firms need to understand the length of time it takes to get a return and the amount of return they can realistically expect.
What’s more, Brown says many minority- and women-owned suppliers are personally financed by the owners, themselves, and that makes them particularly vulnerable to today’s difficult business climate.
“We as auto makers, as well as the suppliers we work with, owe it to these business owners to make sure they have a chance to succeed,” he says. “It’s the only right thing to do if we are going to reflect the diverse customer base that we sell to.”