BEIJING -- Executives from 24 Chinese companies gathered in a four-star hotel in the east China city of Nanjing early last month to learn what Ford Motor expects from its suppliers.
The two-day seminar even included small details such as what kind of packaging suppliers should use for their components.
"We are under tremendous cost pressure back home," says Steven Hsieh, director of supplier technical assistance in China for Ford. "One way is to look for partners in emerging markets like China."
A growing number of automakers and suppliers aim to cut costs by sourcing more from low-cost countries like China.
Locating potential suppliers is only the first step. Deficiencies range from lack of quality control to poor English skills. Supplier development programs like Ford's are essential
"The challenge is on the quality side," says Hsieh.
Many Chinese companies have no export experience or knowledge of Six Sigma quality practices, he says. Their managers may not speak English well, making communication with all but Ford's Chinese employees difficult.
Hsieh has a staff of local quality engineers who are trained by people from Ford's US and European operations. They visit the companies to assess crucial aspects such as how involved the leadership is with the manufacturing process.
Nurturing potential suppliers has become even more urgent after General Motors, PSA/Peugeot-Citroen, and Volkswagen all announced ambitious sourcing goals from China.
Ford is initially focusing on sourcing relatively low-tech components such as speakers, cigarette lighters and car horns, says a US supplier who attended the conference.
That points to a problem in sourcing from China: technology. Most fully domestic Chinese suppliers can't produce high-tech components yet because of a weak technology base, says Sandra Zhou, a supplier market assessment analyst for CSM Worldwide in Shanghai. While many do have their own research and development centers, they lack access to the large amounts of capital needed to develop and produce complete component systems, she says.
Hsieh admits as much. "We still don't touch safety parts," he says. "We are leaning towards info systems, and we have done a lot of castings."
You may e-mail Alysha Webb at [email protected]