Collaboration within the Automotive Industry

Ultimately, we would like all automakers to take a coordinated approach to protecting human rights and environmental conditions in the supply chain. We promoted cross-industry collaboration beginning in North America and now extending to global manufacturers. Our view is that all participants in the supply chain – from the original equipment manufacturers (OEMs) such as Ford, to the suppliers themselves, to the government agencies that set and enforce the regulations governing operations – must be involved to make these efforts sustainable in the long run. Such collective action will not only minimize costs and increase efficiency for OEMs and suppliers alike, but will lead to better results than if individual companies take steps in isolation.

Automotive Industry Action Group Initiative

Since 2004, Ford has worked with the AIAG to implement its capability-building program with global suppliers with the intent of leveraging that work with other automakers (see diagram below). Ford has taken an "open book" approach to its supply chain work and has contributed an "executive on loan" – the global manager of our Supply Chain Sustainability group – to the AIAG to support the industry's work and facilitate sharing what we have learned from working on these issues within our own operations. Materials developed within Ford to promote responsible working conditions have been offered to the group as a platform for use and development. In 2005, Ford, General Motors, Chrysler, Honda North America and Toyota North America began collaborative work to explore a cooperative industry approach to promoting decent working conditions in the supply chain.

Initiative participants have created a set of guidance statements to establish a shared industry voice on key working conditions issues. The statements cover the core elements of individual companies' codes and policies, joint codes created by other industries and key international standards. The guidance statements cover child labor, forced labor, freedom of association, harassment and discrimination, health and safety, wages and benefits, and working hours. These statements serve as a baseline agreed upon by all the participating OEMs and are used as a platform for training. It should be noted that Ford's specific expectations in the Ford CBWC for child labor exceed the expectations in the industry guidance statements.

Training Workshops

Beginning in 2007, the sponsoring OEM manufacturers from the AIAG launched joint factory-level training workshops in China and Mexico. All training materials were based on Ford-developed training. With the support of the AIAG and the China Association of Automobile Manufacturers, the mandatory training in China reached 461 Tier 1 suppliers, including more than 300 suppliers to Ford's joint ventures in China. The information from these training sessions and expectations have in turn been cascaded to 21,799 people at the Tier 1 supplier level and to more than 2,100 Tier 2 suppliers.

AIAG participants engaged stakeholders and further developed training materials before the launch of a training program in Mexico. The work in Mexico was partially funded and supported by a $185,000 grant from the U.S. State Department to Business for Social Responsibility, a nonprofit group that works with companies to advance responsible business practices. This public-private partnership enabled relationship building with local industry associations, the Mexico national government and domestic suppliers in Mexico. As of year-end 2008, a total of 494 Tier 1 suppliers participated in the Mexico training, including more than 250 suppliers to Ford. The information from these training sessions and expectations have in turn been cascaded to 44,833 people at the Tier 1 supplier level and to more than 5,600 Tier 2 suppliers.

Training sessions are planned to be offered during 2009 in Brazil, China, India and Turkey.

Corporate Engagement Pilot

In December 2008, the AIAG and the five participating OEMs held two pilot working conditions training sessions targeted at senior management from the procurement organizations of their top supplier companies. The AIAG is actively evaluating further opportunities to expand these corporate engagement offerings in 2009.

Next Steps – Industry Cooperation

The AIAG cooperative project continues to work on several fronts:

• Actively reaching out to others in the automotive supply chain, including global automakers and heavy truck manufacturers, industry associations, major automotive suppliers and cross-sectoral initiatives. Broader participation will be needed to achieve the vision of an industry-wide approach to promoting decent working conditions in the supply chain.
• Continuing to expand the training program to other countries.
• Increasing supplier ownership of working conditions issues through an expansion of engagement opportunities (i.e., development of e-learning programs and direct engagement in AIAG work groups).
• Development of additional resources and networks that will ensure the successful communication of working conditions expectations throughout the automotive supply chain.