Assessing Suppliers

Since 2003, we have conducted more than 600 assessments of existing and prospective suppliers in 20 countries. The assessments provide feedback to Ford and suppliers about how well they are meeting legal requirements and Ford's expectations. They also provide insight into the effectiveness of our training programs. Assessments consist of a detailed questionnaire, a document review, factory visits, and management and employee interviews, and are conducted with the assistance of external auditors.

In 2009, we conducted assessments across the target countries. The findings from the 2009 assessments were generally consistent with those we had previously conducted. Namely, they identified a wide range of general health and safety issues, several wages and benefits issues and a limited number of other types of noncompliance.

The findings from Ford's 2009 supplier assessments included:

• No evidence of forced labor or physical disciplinary abuse
• A range of general health and safety issues, including inadequate emergency systems
• In some cases, a lack of appropriate timekeeping systems, and thus a failure to pay correct overtime wages
• In some cases, a failure to pay the correct local minimum wage or overtime or to provide the correct social insurance
• A general need to clearly define policy on harassment and discrimination
• Limited cases of restricted workers doing hazardous work
• In some cases, limited or restricted access to appropriate documentation regarding subcontracted labor and privacy policies
• In some cases, nonpayment of company contributions to government-mandated social programs
• Working hours violations related to overtime (In some cases, this overtime is a chronic issue resulting from poor capacity planning, but more often, it occurs only during peak production periods.)

Freedom of association has been difficult to verify. While all assessed suppliers have either union representatives or a grievance process, there may be issues we have not been able to identify through our assessment process.

Another common finding is that suppliers often lack fully developed management systems – including continual improvement processes – to support compliance over time. This finding has validated our training approach, which continues to emphasize management systems at both the corporate and factory levels.

We continue to engage with our suppliers to develop and implement appropriate corrective action plans. Through this process, we have the opportunity to encourage change throughout the tiers of suppliers and affect positive change more broadly.

In 2010, we will continue to conduct supplier assessments across the target countries as necessary.