Building Supplier Capability through Localized Training and Collaboration

The primary focus of our work on human rights in our supply chain is building capability among our suppliers to responsibly manage working conditions. We began this work by developing a training curriculum and approach that we used with Ford suppliers in 17 priority countries and surrounding areas. (See the Working Conditions Program Focus Countries box below.)

We recognized from the outset that a joint effort with other automakers would reach a greater number of suppliers more efficiently – as many of those suppliers are shared across multiple automakers – and would ultimately be more successful in embedding a sound approach to working conditions throughout the automotive supply chain. So we initiated a workgroup within the Automotive Industry Action Group (AIAG), and we recruited other automakers in North America, Asia and Europe to participate. Materials developed within Ford to promote responsible working conditions have been offered to the group as a platform for use and development. We now co-sponsor supplier factory-level trainings whenever possible and supplement those with Ford-specific workshops as needed.

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. 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 historically covered child labor, forced labor, freedom of association, harassment and discrimination, health and safety, wages and benefits, and working hours. These statements have served 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 expand the guidance statements and training curriculum to cover business ethics and environmental responsibility. These expanded trainings – entitled Supply Chain Responsibility – are being implemented in 2012 in China, Mexico, Brazil, Turkey, Argentina, Russia and Thailand.

It should be noted that Ford’s specific expectations in the Ford Code of Human Rights, Basic Working Conditions and Corporate Responsibility 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.

At Ford, we continue to focus on the 17 countries and surrounding regions we had previously identified as having higher risks of substandard working conditions. Among those countries, locations are prioritized based on production and sourcing trends, sales trends and relative perceived risk based on the input of human rights groups, other companies’ experience and other geopolitical analysis. We periodically review the list of countries in comparison with our global sourcing footprint. We did not find it necessary to add countries in the most recent review.

The companies at the AIAG discuss and agree on priority locations for the training workshops. Beginning in 2007, the sponsoring OEMs launched joint factory-level training workshops in China and Mexico. All training materials and the overall approach were based on Ford’s prior work. The launch of each series of in-country training involves participation by OEM representatives and Tier 1 suppliers as well as local industry associations and government support where possible.

Whether delivered by Ford alone or with other automakers at the AIAG, the training workshops emphasize the interpretation and application of legal standards and international best practices. By interacting with managers from the human resources, health and safety, and legal departments of participating companies, the workshops provide for a two-way learning experience touching on the areas of interest for each company. The sessions utilize a “train-the-trainer” approach, so as to expand the scope and impact of the training.

While the supplier training sessions are customized to align with the unique laws, customs, cultures and needs of each location, in general they consist of:

• A day-long interactive workshop facilitated by qualified trainers and involving multiple automotive suppliers, in which participants develop and confirm an understanding of customer expectations, local law, best practices and sustainability management systems.
• Verification that the course attendee subsequently delivered training on the information obtained during the classroom training to all supplier personnel at each factory and communicated customer expectations to their direct sub-tier suppliers. Ford collects this verification within four months of course completion.

In 2011 Ford trainings were coordinated through the AIAG. These trainings included both in-person classroom training sessions and e-learning trainings.

2011 Classroom Training

In 2011, the AIAG jointly sponsored with participating OEMs supplier training sessions held in Brazil, India, Mexico and Turkey. A total of 387 suppliers attended these sessions. Of these, 111 were Ford suppliers and may also have been a supplier to other participating automotive manufacturers. This brings the global total for trained Ford suppliers to more than 1,750. (This figure includes dedicated Ford supplier training sessions conducted with the AIAG as well as industry training sessions in which Ford participated along with AIAG and other automakers). The industry total for the AIAG training sessions across five countries (Brazil, China, India, Mexico, and Turkey) now exceeds 1,500 suppliers trained.

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 training of suppliers in India alone affected nearly 7,000 workers and more than 800 Tier 2 suppliers.

Suppliers trained in 2011 have now moved on to the process of self-assessing their facilities for compliance with local law and Ford expectations and completing the final stage of the program, which is communication to both workers and their own suppliers on the topic of working conditions expectations. In 2012, we plan to conduct additional supplier training sessions in conjunction with the AIAG in China, Mexico, Brazil, India, Turkey and Thailand.

Where possible, these courses will be open to any interested company, and thus Tier 1 suppliers will have the option of asking their own suppliers to attend. The intent is, once again, to increase the scope of impact of the training and push working conditions expectations further down the supply chain.

E-Learning for Responsible Supply Chain Management

The automakers collaborating at the AIAG have developed an online training program on supply chain working conditions and responsible procurement targeted at purchasing and supply chain management professionals. The web-based training was launched in early 2010 by the five participating OEMs free of charge to their respective suppliers and continues to be available. The training has also been deployed internally at a number of the sponsoring OEMs for their own global purchasing and supply chain staff.

Next Steps in Industry Training

As the AIAG initiatives develop and mature, Ford will maintain a leadership position in our work with the supply chain. We will continue to conduct our own training programs in countries not covered by AIAG programs. We will also seek further opportunities to strategically leverage our audit data and training processes to enhance our overall approach to working conditions and environmental responsibility in the automotive supply chain.