Many suppliers are refusing to sign a new Ford agreement they claim is grossly unfair and possibly violates European law, says the incoming president of the European supplier association.
Lars Holmqvist, who takes over as CEO of the European supplier association CLEPA May 1, told Automotive News Europe that Ford’s new terms and conditions for suppliers were supposed to go into effect in October, but were delayed until January because so many suppliers refused to sign it.
But Holmqvist said many still have not signed the agreement. Suppliers believe parts of the contract do not conform to European law. That especially includes one provision that bars them from selling spare parts under their own brand as permitted by new EU Block Exemption regulations, he said.
Ford spokesman Roger Bennett said Ford told suppliers in early November the agreement would go into effect in January.
“We work with our suppliers while refining our new global terms. An overwhelming majority have not expressed any concern,” he said.
A copy of the agreement obtained by Automotive News Europe shows that Ford wants broad access to supplier financial information, facilities and intellectual property.
Holmqvist said Ford has so far not been willing to address suppliers’s biggest complaints. He said General Motors also rates poorly among suppliers but has at least shown a willingness to talk.
“Ford is the most unpopular customer, and General Motors No. 2,” said Holmqvist. “But DaimlerChrysler is moving up there very quickly. I think they have joined the club, something I think that has shocked the German supplier companies especially.”
A survey conducted by SupplierBusiness.com among 55 suppliers who deal with Ford, Mazda, or Premier Automotive Group confirmed that Ford’s relations with suppliers are dismal and that they are unhappy with the new rules.
Stamford, England-based SupplierBusiness.com has interviewed suppliers about six major European manufacturers and will eventually interview suppliers about every major global OEM. The consulting company promised suppliers anonymity on the survey to elicit candid responses.
In the survey, suppliers criticised Ford on numerous counts, particularly in the new terms and conditions. They claim:
- Ford’s purchasing approach is wholly about squeezing suppliers for short-term savings
- Ford asks suppliers to surrender their basic rights on intellectual property and product liability
- Suppliers are not rewarded for quality, innovation or cost-saving suggestions
- Suppliers face unacceptable financial risks in the event of recalls or other unforeseen events.
- Ford’s purchasing staff is needlessly confrontational.
- Ford resorts to threats.