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Ford plans to cut 1,700 suppliers

David Barkholz
Automotive News

DETROIT -- As Ford Motor Co. launches its second restructuring of North American operations in four years, the automaker intends to cut its supplier ranks from 2,500 globally to about 800.

The extent of the Ford supplier cuts was revealed publicly for the first time last week by Neil De Koker, president of the Original Equipment Suppliers Association.

De Koker, speaking at the Automotive News World Congress in Dearborn, Mich., said Ford global purchasing chief Tony Brown laid out the plan to 600 suppliers it invited to a meeting in October. De Koker said the Ford reductions would come over the next few years.

De Koker said the cuts are part of Ford's plan to get better technology and lower costs by doing business with fewer, more capable suppliers. Ford rolled out the first phase of its new supplier partnership program in September.

Previously, Ford had said it would cut about half its suppliers.

Last week, Ford spokesman Paul Wood confirmed the more aggressive goal. He said the program was aimed at improving innovation and economies of scale. "This is about developing a more sustainable business model," he said.

Ford, which buys about $70 billion in parts annually, has announced 27 preferred suppliers that will increase their future business with Ford. They include Johnson Controls Inc., Dana Corp., Lear Corp. and Visteon Corp.

General Motors also has reduced its supplier ranks, said spokesman Tom Wickham. GM cut 500 suppliers in 2005, and it now has 3,200.
 
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