Ford Cutting Deep Into Supply Base

Ford Motor Co. Will Shed More Than half of its current roster of 2,000-plus suppliers, trimming the number to 700-800 long-term, the auto maker's purchasing chief says.

“It will happen over a period of years,” Tony Brown, senior vice president-global purchasing, tells reporters in New York of the supply-base downsizing.

“We have to get capacity out of the system to get the industry healthy,” Brown says. “I won't be sourcing new business with some suppliers.”

Ford will select suppliers that can deliver competitive products for its vehicles, he says, adding the auto maker is pressing ahead with its downsizing policy, despite the fact its parts count is going up exponentially.

Ford's supply-base rationalization will impact the financial stability of some companies, Brown acknowledges. “They will be under more stress over time,” he says. “For some suppliers, the only rational strategy is an exit strategy.”

As suppliers drop by the wayside, others will pick up demand, he predicts, eliminating some overcapacity problems. Parts costs will be reduced over the life of contracts.

“We will redistribute volume with suppliers we elect to do business with,” Brown says. “The winning suppliers are going to love us, but the losing suppliers are not going to send me a holiday card.”

Ford Aims to Increase Common Sourcing
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