Ford cuts supply base in drive to lower prices

25 January 2006
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25 January 2006 | Anusha Bradley

Ford Motor Company is aiming to reduce its global supplier base by nearly 70 per cent in the next few years.

It said last year it planned to halve the number of suppliers in a bid to get better technology at lower prices. But this week it revised this figure when it announced its intention to slash the number of its suppliers from 2,500 to 800.

The car firm also announced plans to cut between 25,000 and 30,000 jobs and close 14 plants in North America. Chairman and chief executive Bill Ford described the decisions as "painful sacrifices to protect Ford's heritage and secure [its] future".

Ford said the company's North American operations had been struggling against competition from Asia and experiencing high-labour and raw material costs.

He said: "We have to reduce the gap between Ford and our competitors in material costs. Doing so will not only improve our cost structure through economies of scale, but it will allow us to foster greater innovation through stronger, smarter partnerships with our key suppliers."

Ford has so far announced 27 preferred suppliers, including Johnson Controls, Dana Corporation, Lear Corporation and Visteon, that are set to receive more business. The company would not disclose which firms it intends to drop.

SMjan2006

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