Ford: New look at old news
An old story back at the beginning of May has had me wondering. Not because I own a Ford truck, but because I don’t believe the entire story has been told. Some reports are making this story about bad supply chain management.
The existing story was regarding the Excello plant closure and the line that most people are taking out of this is the following:
Gabet said two of the three principal automotive customers for the company’s products, Honda and Toyota, agreed to contribute to a fund for the displaced workers, providing them their vacation and some severance pay in an amount to be determined.
The third and biggest customer, Ford, declined to contribute to the fund, he said late Tuesday. Sales to Ford accounted for 45 percent of the company’s business. Honda’s and Toyota’s orders, together, according to Gabet, comprised about a third of Excello’s production.
“We tried to negotiate with Ford,” he said, recalling a meeting in Detroit that Excello’s attorneys and representatives of all three major automotive customers attended. “That’s when Ford told us they had decided not to help the workers, that they won’t contribute.”
So then the regular chastisement of big US companies begins. “Why did Honda and Toyota give money to the workers and Ford didn’t?” “What does this say about supply chain’s and Ford?”
So I thought I would just bring out some facts, to help those who did not do their homework.
- Excello was a $44 million dollar company.
- Excello lost money because as they stated in another plant closure back in 2006, “to offset rising raw material and medical costs”
- Excello filed for bankruptcy just after this plant closure announcement
- The responsibility for the workers in their plant was Excello’s
- Ford is having a very rough year.
- Ford just approved getting 1.1 billion dollar bonding to help fund pension and medical costs.
- Ford has had bad management, both past and present.
- Most of Ford’s current problems are trying to pay for promises that were made to the union. Promises which the union did not consider the corporate impact on the health of Ford.
- The union could help Ford adjust the contract to make a healthier company for the rest of the employees.
- Honda and Toyota do not have a union or pension and medical problems because of bad promises in the past.
- Ford did not close this plant, Resilience Capital Partners Llc did.
So while Toyota and Honda did a noble thing that they did not have to do, should Ford mortgage the house to give charity to a company which could not manage itself through a tough time? If you own Ford stock, are you okay for them to go into more debt to be nobel or are you hoping they carry their Q1 through the year to get a dividend?
Yes, Honda and Toyota are in a better position for corporate charity. I think this is fantastic, but I do not see this as a supply chain question. They had a working relationship, they had the funds and they did the right thing. Cool.
Maybe it is just me, but I do believe that supply chain has some responsibility to create WIN-WIN situations. I do not believe supplier and vendor should be at odds, but more in agreement.
Having said this statement, these philosophical discussions have nothing to do with supply chains. It has more to do with bad management.
Some in this industry should be asking, what benefit to supply chains does this type of editorial serve? My answer, none. Good supply chain management is about good management. What impact does a failing Ford motor company have on the remainder of its supply chain.