Collaboration Within the Automotive Industry

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 share 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 through the AIAG to explore a cooperative industry approach to promoting decent working conditions in the supply chain. We continue to seek the participation of all global OEMs. Nissan and Daimler have since joined the AIAG and have begun participation in a number of established and emergent workgroups. Additionally, Renault has participated in the 2010 Turkey Global Working Conditions supplier training. We have engaged suppliers across a variety of different commodities. Their participation has been important to inform the activities pursued by the automakers at the AIAG, as has engagement with government (both U.S. and local governments in the countries in which training programs are provided) and nongovernmental agencies.

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. In 2010, we reached agreement with the other automakers to also expand the training curriculum to cover business ethics and environmental responsibility.

It should be noted that Ford’s specific expectations in the Ford CBWC for child labor exceed the expectations in the industry guidance statements and also include elements not yet addressed by the industry guidance statements, such as community engagement and indigenous populations.

Tier 1 Engagement for Supply Chain Sustainability

Two new countries saw the launch of the AIAG jointly sponsored supplier training in 2010 – Turkey and Brazil. Both launches were executed successfully with the attendance of 463 total suppliers. The training in Turkey involved – for the first time – participation by a couple of European-based OEMs. Consistent with the format of Ford’s original design, the attendees were required to subsequently complete a cascade of the training and expectations to the entire factory population and suppliers. Through this process, the trainings impacted more than 83,300 workers and 29,600 Tier 2 suppliers.

The automakers collaborating at the AIAG have developed an online training program on supply chain working conditions and responsible procurement targeted at purchasing or supply chain management. The web-based training was launched in early 2010 by the five participating OEMs free of charge to their respective suppliers. The training was also deployed internally at a number of the sponsoring OEMs for their own global purchasing and supply chain staffs. Evaluation of the course and its impact is underway.

Next Steps in Industry Cooperation

The work of the companies at the AIAG continues on several fronts:

• Exploring an industry response to raw materials sourcing and transparency challenges
• Continuing to expand the factory-level supplier training program
• Increasing supplier ownership of working conditions issues through an expansion of engagement opportunities (i.e., the launch of e-learning programs in 2010 and continued 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

For all workstreams, the AIAG and the companies are actively reaching out to others in the automotive supply chain, including global automakers and heavy truck manufacturers, industry associations and major automotive suppliers, as well as cross-sectoral initiatives. Broader participation will be needed to achieve the vision of an industry-wide approach to promoting supply chain sustainability.