CPOs go to Washington
Purchasing execs from the Big Three meet with Obama’s Automotive Task Force
By Dave Hannon -- Purchasing, 2/26/2009 3:59:00 PM
With concerns of a struggling automotive supply base growing, President Obama’s automotive task force invited a host of automotive industry executives to Washington this week to discuss the issue. And reportedly among them were the top purchasing executives for General Motors, Ford Motor and Chrysler.
While details of the meeting are being kept under wraps (Purchasing.com has requests in to all three automakers for details), various media outlets including Bloomberg and the Wall Street Journal are reporting that Ford’s Group Vice President of Global Purchasing Tony Brown, GM’s Bo Andersson, group vice president of global purchasing and supply chain, and Chrysler’s newly appointed CPO Scott Garberding were all present at the meeting on Monday.
“The supply base is so interconnected, not just for the domestic automakers, but for the imports alike,” Ford’s spokesman Todd Nissen told Bloomberg this week. “We support the government’s efforts to look into that and to work with the industry to develop ways that assistance can be rendered.”
Concerns about the automotive supply base are increasing as the struggles of the major OEMs slide down the supply chain in the form of fewer orders and later payments. In its most recent Supplier Barometer report, the Original Equipment Suppliers Association (OESA) says suppliers identify production volumes (absolute levels and predictability), customer bankruptcy risk (especially of an OEM) and cash flow (as a result of the low production levels and delayed payments) as the top three risks they face in 2009. As if customer-facing concerns weren’t enough for suppliers to deal with, 43% of suppliers answering the survey have had their own suppliers ask them to tighten up payment terms and pay invoices faster.
While much of the attention in the automotive industry has focused on the OEMs’ liquidity, some major tier one suppliers such as Visteon and Delphi are in their dire straights. In late January Purchasing.com reported that the U.S. automotive supply base was seeking a $10 billion bailout. By February the formal request sent to the U.S. Treasury Department by OESA and MEMA ranged from $18.5 billion to $25 billion, according to news sources.
“The dramatic downward spiral that the supplier community witnessed in the last few months necessitates immediate action from the Treasury Department,” said Bob McKenna, president and CEO of MEMA. “We are not seeking blanket protection from natural consolidation, but need temporary relief to sustain the very foundation of the domestic auto industry and a critical sector of the nation's economy.”
Also see: Supplier management: Survival lessons from automotive buyers
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