The abrasive and absolutist style of Ford’s David Thursfield and DaimlerChrysler’s Wolfgang Bernhard in dealing with suppliers was a factor in their sudden career flameouts, according to sources at both companies.
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Bernhard and Thursfield both carried other baggage, made other kinds of enemies, and were each caught in internal political wars. But suppliers played a role in the downfall of both executives.
DaimlerChrysler’s management board pulled the plug on Chrysler COO Bernhard two days before he was to replace Jürgen Hubbert as head of Mercedes-Benz passenger cars.
Thursfield was Ford’s worldwide purchasing chief and executive vice president for international business until his forced retirement two weeks ago. Ford now lists Thursfield as a consultant on its media website.
At Chrysler, Bernhard drove a rigorous cost-cutting effort that won him acclaim and got him promoted. But in the eight weeks since he was named to the Mercedes post Bernhard managed to rankle colleagues, unions and suppliers by taking the same approach in Europe.
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By GlobalDataInsiders say he discovered that the proud makers of Mercedes components were less submissive than Chrysler suppliers in the United States.
Bernhard nearly had the same thing happen to him at Chrysler three years ago. He so outraged US vendors that they rose in revolt. He survived because Chrysler began to pull out of a financial crisis.
Chrysler’s cost-oriented purchasing style had already begun to influence the way Mercedes-Benz sources parts, alarming some traditional Mercedes vendors.
Thursfield, meanwhile, ran roughshod over Ford suppliers around the world during the past two years.
The two shocking career collapses are reminders that enormous power rests in the hands of major constituencies: unions; dealers; and, increasingly, suppliers.
Key constituencies are crucial to the careers of top executives. Dealers helped to get rid of Jacques Nasser at Ford in 2001. Wolfgang Reitzle lost out at BMW two years earlier because the unions opposed him.
Now suppliers are playing key roles in determining the top executive ranks of auto companies.
Survived Chrysler
Bernhard’s first move when he took over at Chrysler was an across-the-board price cut. Although he was later hailed for sharply reducing the company’s costs Bernhard nearly didn’t survive the first six months. Suppliers accused him of being unyielding and out of touch.
Still, American suppliers were more accustomed to Inaki Lopez-style treatment and Chrysler faced an emergency situation. Bernhard’s early mistakes were forgiven, if not forgotten.
A lot of it has to do with personal style.
One supplier CEO said of Thursfield: “His purchasing policy in Europe was structured, reasonable and fairly successful (but) his activities in the US/internationally degenerated to a brutal unilateral deprivation of suppliers contractual rights.
“The effect is strongly demotivating, creating right away fears and materially new risks to suppliers. This is certainly not the way to achieve positive developments, taking into consideration that suppliers represent 75 % plus of the content and value of Ford’s products.”
Sources say some suppliers took their complaints directly to CEO Bill Ford.
With Thursfield out, a supplier industry executive said: “Ford should return to fair and balanced forms of cooperation with its suppliers, based on trust, mutual respect and positive business attitudes. This will help them tremendously.”
Only two purchasing executives since the end of World War II have made it to the tops of major auto companies: GM chairman Rick Wagoner and Ford president Nick Scheele. Both got on well with suppliers, even while applying the pressure.
Wagoner followed Lopez at GM’s procurement head and succeeded in improving supplier morale.
Scheele is a virtual synonym for affability – though he was a tough negotiator while a purchasing man.
On the other hand, Bernhard and Thursfield created purchasing cultures in which suppliers did not feel respected – a change clearly evident in recent SupplierBusiness.com supplier satisfaction surveys.
Wolfgang Chur, Bosch‘s head of sales, Original Equipment sector, automotive technology division says different auto companies have different approaches.
“It depends very much by customer,” said Chur. “Some are more aggressive, others are more on the co-operative side, and I think this distinction between being aggressive towards suppliers and being, still trying to be partners on the other side, will play an important role in the general relationship, how suppliers do business with individual customers.”
Exercising power
Tough purchasing bosses come and go, but the supplier partners remain. And they have become integrated in processes.
The slow but steady shift of development responsibility means power is shifting, too. Suppliers have managed to insinuate themselves into the fabric of these companies.
More suppliers are registering complaints about purchasing tactics to the CEOs of these companies, going over the heads of the purchasing bosses.
The demise of Thursfield and Bernhard is a sign that supplier organisations such as CLEPA in Europe and OESA in North America can use their power to affect change of this kind, too.
Contracts – terms and conditions – may not change. But management style is critical. Ford and DCX should seize this opportunity to clear the atmosphere and improve relations.
The supplier share of the value-add on cars is 75% and growing – and they do half the R&D in the industry, especially on key electronic systems. Not all suppliers are equal. If you want the best you have got to treat them right.
SupplierBusiness.com
