Building Supplier Capability through Localized Training and Collaboration

The primary focus of our work on human rights and working conditions in our supply chain is building capability among our suppliers to responsibly manage working conditions. We began by developing a training curriculum for Ford suppliers in high-priority countries and surrounding areas. (See Working Conditions Program Focus Countries box below.) Initially, we based the trainings on Ford’s own Code of Basic Working Conditions and implemented them ourselves at our supplier facilities.

We recognized from the outset, however, 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. This collaboration allows OEMs to be more successful in embedding a comprehensive approach to address working conditions throughout the automotive supply chain. In 2005, to formalize the approach, we initiated a work group within the Automotive Industry Action Group (AIAG) and recruited other automakers in North America, Asia and Europe to participate.

We have since worked with other automakers through the AIAG to develop a set of guidance statements that establish a shared industry voice on key working conditions issues and a training program for industry suppliers. Initially the industry guidance statements and trainings covered human rights and working conditions issues such as child labor, forced labor, freedom of association, harassment and discrimination, health and safety, wages and benefits, and working hours. We have since expanded the training topics to include business ethics and environmental responsibility.

AIAG and CSR Europe recently aligned on a common set of guiding principles to enhance sustainability performance in the supply chain. Through the member companies of both AIAG and CSR, 14 automakers (including Ford) have aligned to the common principles. This collaboration provides a common voice on these important issues among multiple OEMs across regions. For more information on these common principles please see: AIAG Corporate Responsibility Guidance Statements and CSR Europe Guiding Principles.

Supplier Training Program

Most of our supplier training is now implemented through the AIAG or CSR in conjunction with other automakers. However, we continue to supplement AIAG- and CSR-led trainings done in conjunction with other automakers with Ford-specific workshops as needed.

Where Trainings Occur

Beginning in 2007, the sponsoring OEMs launched joint factory-level training workshops in China and Mexico. We have added locations since that time. To date, the expanded trainings have been implemented in Argentina, Brazil, China, India, Mexico, Romania, Russia, Thailand, Turkey and Venezuela.

Locations for trainings are chosen through discussion and agreement by the AIAG or CSR member companies. The launch of each series of in-country trainings involves participation by OEM representatives and Tier 1 suppliers as well as local industry associations and government support where possible. At Ford, we develop our recommendations for training locations with a focus on the 21 countries we have identified as having higher risks of substandard human rights and working conditions (see Human Rights and Working Conditions Program Focus Countries box below). Among those countries, we prioritize our recommendations for training locations 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 our list of priority countries in comparison with our global sourcing footprint. We are reviewing these countries again in 2014.

What Training Sessions Include

Training sessions are customized to align with the unique laws, customs, cultures and needs of each location. Generally, the following human rights, working conditions and environmental responsibility issues are addressed:

• Harassment and discrimination
• Health and safety
• Wages and benefits
• Working hours
• Child labor
• Forced labor
• Freedom of association
• Key areas of environmental responsibility, including energy and greenhouse gas emissions, waste, regulatory requirements, environmental testing, and employee, subcontractor and supplier training
• Environmental management systems and continuous improvement
• Environmental performance of products

Training workshops emphasize how these topics are covered in local legal standards, in the industry guidance developed by participating automotive OEMs, and in international best practices. Both the industry guidance and international best practices shared in the training sessions may exceed local laws. The trainings also include strategies for developing management systems to ensure compliance in each topic area. The sessions address the business benefits of promoting social and environmental responsibility, including protecting and enhancing brand reputation, improving quality and productivity, and avoiding costs associated with employee turnover, absenteeism, injury and illness.

The training sessions are generally day-long interactive workshops facilitated by qualified trainers and involving multiple automotive suppliers. Training sessions are structured to provide participants with a solid understanding of customer expectations, local law, best practices and sustainability management systems.

Training sessions generally target managers from the human resources, health and safety, and legal departments of participating companies. The sessions use a “train-the-trainer” approach to expand the scope and impact of the training. Participating suppliers are required to cascade the training materials to management and all personnel within their own company as well as to their direct suppliers. Ford requires confirmation that the training information was cascaded to the entire factory population and suppliers within four months of the training session.

In 2010, the automakers collaborating at the AIAG launched an online training program on supply chain working conditions and responsible procurement targeted at purchasing and supply chain management professionals. This Web-based training is offered free of charge to suppliers of the five OEMs participating in the AIAG training program. The training has also been deployed internally at a number of the sponsoring OEMs for their own global purchasing and supply chain staffs.

2013 Trainings Completed

In 2013, we held joint industry trainings through AIAG in Brazil, Mexico, South Africa and Turkey. We also held trainings in Romania in conjunction with CSR Europe. More than 230 Ford suppliers attended these classroom sessions. These trainings included both in-person classroom training sessions and e-learning trainings.

To date, we have conducted approximately 145 training sessions globally, attended by nearly 2,100 supplier companies. (This figure includes dedicated Ford supplier training sessions conducted with the AIAG as well as industry training sessions in which Ford participated along with the AIAG and other automakers.) Because attendees are required to subsequently cascade the training and expectations to the entire factory population and suppliers, these trainings indirectly reach even more companies and individuals. Through this cascading process, the training of suppliers globally since the inception of the program has impacted more than 2,900 supplier representatives, who in turn have cascaded the training information to nearly 25,000 supplier managers and more than 485,000 individual workers as well as over 100,000 sub-tier supplier companies .

Suppliers trained in 2013 have now moved on to the process of self-assessing their facilities for compliance with local law and Ford expectations and communicating expectations to their own workers and their suppliers.

In 2014 we plan to conduct additional supplier training sessions in conjunction with either AIAG or CSR in Brazil, China, India, Mexico, Russia and Turkey. Where possible, these courses will be open to any interested company; 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 sessions and push human rights and working conditions expectations further down the supply chain.

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 human rights, working conditions and environmental responsibility in the automotive supply chain.

In 2014, we expanded our training program to include non-production suppliers. We are currently piloting training non-production suppliers and assessing if the production training process requires any modifications to meet the needs of non-production suppliers.