'Whitewater:' Ford swims against the tide; suppliers' concerns aired,but the jury's still out

Chairman Alex Trotman described the turmoil Ford Motor Co. would face in implementing its Ford 2000 global reorganization as "whitewater" -- not the Bill Clinton variety but, rather, the classic Webster's Dictionary definition: "Frothy water, as in breakers, rapids or waterfalls: Quickwater."

Carlos E. Mazzorin, vice president of production purchasing for Ford Automotive Operations (FAO), presciently alluded to Mr. Trotman's phrase in an Aug. 9 letter to 20 Ford suppliers inviting them to a Sept. 13 meeting. Other supplier executives were to be invited to subsequent sessions.

His timing could not have been keener, because suppliers were in open revolt against what they alleged to be Ford's heavy-handed purchasing policies (see WAW -- Aug.'95, p. 5).

Their wrath focuses on Ford's demand, handed down by Mr. Mazzorin during the company's first global supplier meeting last April 1, that they reduce prices by 5% in each of four years starting in 1995; its refusal to allow pass-through of raw materials price increases; and disputes over who gains or loses on currency fluctuations. They also charge that Ford rips up contracts and demands revisions, and strongly question the company's ethics.

WAW obtained a copy of the Aug. 9 letter. "Based on recent conversations with a number of suppliers," he writes, "I know that this turmoil has extended to our supply base and has raised questions, concerns and frustrations." Let's sit down, he says, and discuss those issues and "other aspects of our business relationship."

During the April meeting, Mr. Mazzorin writes in his Aug. 9 letter, "I handed down tough cost and quality targets that we must achieve together to remain competitive." Global business conditions, he adds, have further churned up the whitewater," prompting him to stage the September session.

Mr. Mazzorin's invitation gives no hint, however, that he would be accompanied by his boss, FAO President Edward N. Hagenlocker, suggesting Mr. Hagenlocker was a late-starter as the supplier rebellion began picking up steam.

Supplier executives who attended give Ford credit for airing their gripes, but the jury remains out on whether the two sides are making meaningful progress in patching up their differences. WAW sources say many company-specific issues were resolved by Mr. Mazzorin and his troops before the four-hour supplier meetings -- with Mr. Hagenlocker on hand -- were held.

Reports also are circulating that the Ford family, concerned about some of the harsh language by supplier executives quoted in WAW's August editorial, have taken a personal interest in the dialogue. A source close to the discussions says suppliers can forget about Mr. Hagenlocker jettisoning Mr. Mazzorin. "He's sticking with Carlos," says one.

For the record, Ford says it expected turbulence in suppliers' ranks as Ford 2000 takes hold, attributing much of the commotion to communications. Thus, the September meetings.

Based on WAW input from Ford's large and long-term suppliers and other sources, the strained relations with Ford won't be patched up overnight. Says one source: "They're used to normal tough price negotiations, but it's more than that; it's a fundamental ethics issue. There's a lot of backing-out of negotiated contracts, and that shouldn't be part of doing business."

The president of one company that claims to be a victim of exactly that maneuver says he built a plant based on a Ford contract only to see Ford back out after it was completed. Now Ford is asking him to build another plant at a different location, and perhaps astoundingly he's trying to accommodate his big customer. He says cost-recovery is the chief stumbling block, but it goes deeper than that. "The policies keep changing; at Ford you can't get anything done. They don't accept supplier visits -- they keep pushing you down to the lowest level," he maintains. He has little respect for the buyer he has been forced to deal with. "She doesn't have a clue, he says."

Another supplier says Ford refuses to recognize "value-engineering analysis" provided by vendors "that would support" the company's cost-reduction efforts. But would he halt component shipments to Ford, as some large suppliers have privately threatened to do? "I can't afford not to ship," he says. "My schedules are low as it is."

Accusing Ford of "strong-arm tactics," the president of another company that relies on Ford for half of its annual sales volume says that "Ford is off in left field" when it comes to supplier relationships. "They're doing too much, too soon."

Whitewater.

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