Ford last week adjusted its earnings guidance through 2006, saying it would miss its $7 billion profit target for next year and fall short of its initial expectations for 2005. (See related story: Ford Backs Off $7 Billion Target, Cuts 2005 Outlook)
Speaking at the annual Society of Automotive Engineers World Congress here, Phil Martens, group vice president-product creation, tells attendees, “We cannot prosper without a stable supply base.”
His words come as many U.S. suppliers, too heavily reliant on business with Detroit's Big Three, are swimming in red ink in the face of rising health-care costs, soaring steel and oil prices and continued pricing pressure from their bread-and-butter customers.
“It's easy to see why our suppliers are getting hit with a double whammy,” he says, “The OEMs have brought continuous pressure on the suppliers with regard to cost. If you add that to the rising price of steel and oil (essential to the production of plastics), together you get to (one of our) cost concerns: the health of our supply base.”
Martens says he hopes Ford can take some of the pressure off by establishing a business-to-business partnership with suppliers, rather than continue with the cost-crunching relationship that long has characterized the auto maker's dealings with the supply chain.
Nevertheless, Martens makes clear it's up to suppliers to understand Ford's emerging Global Product Development System, which is in the second year of what promises to be a 3- to 4-year rollout.
Suppliers that master Ford processes and play along with the company's move to CATIA version 5 computer-aided-design software, which is being rolled out globally as the exclusive engineering interface, put themselves in a better position to do business with the auto maker, Martens says.