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1999 FIN – Ford Driving Fastener Realignment

August 2, 1999 FIN – Ford Motor Company is aggressively cutting the number of its fastener suppliers from as many as 30 companies today to as few as four in the near future. That is forcing several fastener manufacturers and distributors to look at some form of working together.

Scott Parkinson, in charge of fastener buying at Ford, told FIN there is not a current set number of fastener suppliers the automaker is aiming for. “It is a moving target. One maybe is utopia,” Parkinson said.

Ford sees the changes resulting in “consolidations, acquisitions, mergers and partnerships” among fastener manufacturers and distributors, Parkinson said.

A step in that direction is finding fewer companies to supply all the fasteners for one specific vehicle platform or one plant.
If no one manufacturer can find a way to supply all the fasteners, it may be necessary for the supplier to develop source management systems. Parkinson told FIN that price will not be the only qualification for fastener suppliers. Quality and engineering expertise will weigh heavily.
“We’re not fastener experts,” he explained. “Our suppliers are. I expect our suppliers to take on greater responsibility for fastener-related issues.”

Ford also wants a supplier who has “a ‘go to’ kind of guy if there are problems – a guy or guys that can answer all questions oar needs, or at least most of them,” Parkinson said.
That may mean the fastener supplier will have staff based in Ford facilities, he added.

The same winnowing process has been happening among other automotive suppliers. Parkinson noted that there were once hundreds of suppliers for interiors, with each providing one or more portions, such as just the seats or just carpets. Now Ford is looking for companies to provide the entire interior.
“Is that possible in fasteners?” Parkinson asked. “There are a lot of specialized applications using unique fasteners, but 70% to 80% may be typical nuts and bolts.”

Hagan: Everybody Wants to Make the Cut

Investment banker Richard Hagan of New York-based Pinnacle Capital Corp., said the Ford action is forcing fastener suppliers to “explore” consolidations.

Hagan said companies must have annual revenues in the $100 million to $150 million range to make the cut with Big Three automakers.
“Everybody wants to make the cut,” Hagan observed. “That may mean a joint marketing company or a manufacturer alliance with a distributor.

The single-source trend explains why manufacturer Textron bought distributor Flexalloy recently.
“Textron got the jump on everybody because of what Flexalloy does,” Hagan explained. Experience with such customers as Freightliner and Mercedes gives them an advantage.

The change may push such companies as Illinois Tool Works to bid with a logistics specialist to supply the automaker. In ITW’s case that distribution company could even be C-Tech Systems, which it sold to Distribution Dynamics, a privately held consolidator of fastener distributors.

Companies to watch in the winnowing process are: MNP, Textron, ITW, SPS Technologies, MacLean-Fogg, General, Bamal and Purchased Parts.

The likely first candidates will be those already supplying to Tier One automotive companies.
However, not every major distributor wants the automotive business. One publicly held company reportedly spurned feelers because the motor vehicle business doesn’t provide the profit margins it receives from other industries.
“I’m not sure the automotive OEMs are going to pay the margins other industries are,” Hagan observed.
What Hagan is sure about is that “there are going to be some winners and some losers,” as the automotive supplier battle gets tougher. ©1999/2009 Fastener Industry News.
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