Ford Sollers says domestic suppliers are key to dealing with the challenges faced by all automakers in the Russian market as the country continues to grapple with ruble and oil price pressures, as well as international economic sanctions.
Russia has been beset by a storm of huge proportions during the last few years, with the automotive sector in particular taking a severe battering, but achieving close relations with home-grown suppliers can help to partly offset at least some of the specific difficulties the country has.
“Suppliers are key in terms of us being able to face these key challenges,” said Ford Sollers VP purchasing, Rob Harrison at last week’s Russian Automotive Forum organised by Adam Smith Conferences in Moscow. “What we can’t do is sacrifice collectively our working relationships.
“Localisation has a number of benefits not only for the OEM, but also for the supplier. Decree 166 [mandating local content in Russia] was a great catalyst to spur on that first level, [but] we need to look beyond that level of compliance. It has to be economically viable and good business for us all. It is only through that further and deeper level of localisation we will get a competitive supply base.
“If we don’t get to that amount of competitiveness, then Decree 166 and support measures will need to be there for ever. Longevity and the ability to sustain our business at a competitive level is only going to come by us all addressing cost we have at [the] OEM and supplier level.”
Part of that competitiveness drive can be aided by reducing the amount of imported components from Tier 2 to Tier N level (below T2), while logistics costs and exchange rate pressures also add to the price burden.
“That [importing] never makes sense when we have the supply base here – we have to avoid importing parts only to put them into finished vehicles and re-export them,” added Harrison.
The VP also stressed the role of the Global Council of Suppliers at Ford, adding the company worked “very, very hard to comply with and meet the expectations” of suppliers.
“Most important – to be consistent and predictable – we don’t want fair-weather friends,” said Harrison. “We try to increase the on-going level of communication – we have put a lot of effort into communication.
“We would ask our suppliers to use these communication media to feed back to us. Like every relationship, it is a two-way street.”