Ford Wins First-Ever Top 3 Ranking Among Suppliers
Ford Motor Co., following its first annual profit since 2005, became the only non-Japanese automaker ever ranked among the top three in a survey of suppliers.
Ford’s rating of its working relationship with partsmakers in North America rose 14 percent, placing it ahead of Nissan Motor Co. to capture third place in the annual Planning Perspectives Inc. ranking that started in 2002. Honda Motor Co., the Tokyo-based leader in the 2010 report, was followed by Toyota Motor Corp. in second place.
Ford and other U.S. automakers “finally realized they can’t treat suppliers the way they had been,” said John Henke, chief executive officer of Planning Perspectives in Birmingham, Michigan. “They’ve got to be absolutely vigilant that they don’t revert back to their old ways.”
Positive relationships with suppliers can help automakers trim costs, improve quality and spur innovation in the design of parts, which typically make up 70 percent of a vehicle’s value. Toyota had led the survey since its inception until falling from first place in 2009, and its rating slid a further 2.6 percent this year.
General Motors Co., still ranked in the lower half of the survey, improved the most of the top six U.S. automakers in terms of sales, with the Detroit-based automaker’s rating by suppliers gaining 25 percent. Auburn Hills, Michigan-based Chrysler Group LLC, the lowest ranked since 2008, improved by 15 percent. Each company entered and exited bankruptcy last year.
The scores for Honda and Toyota City, Japan-based Toyota have declined since 2007, “probably the result of the dramatic growth of these companies who were then hit with the recession and falling sales,” he said. “This, in turn, led them to become somewhat adversarial in getting price reductions from suppliers.”
Mike Goss, a spokesman for Toyota, the world’s biggest carmaker, said, his company will analyze the results and “adjust accordingly.”
Ford rose 64 cents, or 5.6 percent, to $12.15 at 4 p.m. in New York Stock Exchange composite trading. Honda’s American depositary receipts gained 68 cents, or 2.1 percent, to $33.13, while Toyota’s ADRs climbed $1.86, or 2.5 percent, to $76.75.
The study tracks suppliers’ impressions of their working relations with the top six U.S. automakers across 14 purchasing categories, such as electronics, interior and chassis. The survey includes responses from 646 sales people at 510 suppliers.
Reliance on Suppliers
“A lot of the technology that’s in our vehicles comes from our suppliers, and certainly a lot of the cost of our vehicles comes through our suppliers,” Tony Brown, Ford’s global purchasing chief, said in a May 7 interview. “So we can’t have a profitable Ford without an effective, efficient and profitable supply base. And the company embraces that notion now.”
Chrysler, controlled by Turin, Italy-based Fiat SpA, said in a statement that “we are working very hard to fix our internal processes and talk with suppliers in a transparent, fair and collaborative way,” adding that “we are on the right path, and we know we have more work to do.”
Henke praised Bob Socia, GM vice president of global purchasing and supply chain, for making supplier relations a priority.
“It is gratifying that despite our time in bankruptcy, we had the most significant year-to-year improvement of any company in the survey.”
Honda works with “suppliers to improve our operations as a team,” said Ed Miller, a Honda spokesman. Nissan declined to comment, said Brian Brockman, a spokesman.
2010 Automaker 2010 2009 Rank Score Score 1 Honda 340 349 2 Toyota 330 339 3 Ford 264 232 4 Nissan 249 268 5 GM 228 183 6 Chrysler 187 162