Kimberly S. Johnson
Ford says more of its suppliers are ailing in 2009
DEARBORN, Mich. — Ford Motor Co.’s top executive for auto parts purchasing said Wednesday the number of the automaker’s suppliers that are under distress, bankruptcy protection or under observation has more than doubled in the last year.
Tony Brown, Ford’s vice president for global purchasing, declined to give an exact number of distressed suppliers, but said in a briefing that more suppliers are in the category of being monitored as slumping auto sales force automakers to slow production and order fewer parts.
Brown said he had several teams of people looking at ways to aid distressed suppliers operationally, as Ford has limited funds to financially support the ailing companies.
“You could expect Ford to take the appropriate action given the situation and it could include providing financing,” he said. “And it could include simply having an engineer go in and clean up their process.”
The Dearborn-based automaker has pledged to provide at least $125 million in debtor-in-possession financing to its former subsidiary, Visteon Corp., which is under Chapter 11 bankruptcy protection.
Ford said it is accelerating its plans to consolidate the number of suppliers it uses. The company said 850, or 48 percent, of its suppliers will be eligible for future work at the end of the year, down from the 1,683 eligible at the end of 2008.
“We don’t need that capacity,” he said. “We need a stronger, healthier, profitable supply base. This is our strategy to make that happen.”
Ford will have 1,650 total suppliers at the end of 2009, compared with 2,198 at end of last year. Its goal is to eliminate short-term suppliers, with a target of 750 total suppliers in the coming years. Ford purchases about $90 billion in parts annually.
Brown said the reduction of its suppliers would be “orderly” and not disruptive to the other automakers that may do business with the companies.
Ford also said it has added 16 companies to its key group of component and service suppliers, including BorgWarner Inc. and Denso Corp. There are now 82 suppliers in the company’s Aligned Business Framework, which increases the automaker’s collaboration with the companies.
Ford shares rose 10 cents, or 1.8 percent, to close at $5.63. Shares of Auburn Hills, Mich.-based BorgWarner rose 65 cents, or 2.1 percent, to $31.24.
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