DETROIT - The merger agreement between Chrysler Corp. and Daimler-Benz AG will not change Chrysler's commitment to a joint U.S. effort to develop minority suppliers, Chrysler says.
'We continue to be committed to the program, with a strong emphasis on the North American market,' said Jethro Joseph, manager of special supplier relations for Chrysler.
He was referring to an initiative between the Big 3 and the Small Business Administration. The agreement, signed in February, commits the automakers to increasing minority supplier purchases by $3 billion over the next three years. That amounts to 5 percent of all purchases of parts, services and materials.
Joseph's comments came during a mid-May press briefing in Detroit, where the SBA and Big 3 kicked off the initiative.
'We are formalizing a relationship between the federal government and the private sector,' said SBA Administrator Aida Alvarez. 'In a sense, it changes the rules of the game.'
Alvarez showed a new SBA-sponsored Internet site for the initiative (www.sba.gov/outreach/). It includes links to the automakers and to the SBA's ProNet automated procurement network. The site also contains a location, product and service listing of Tier 1 and Tier 2 automotive suppliers.
Joseph was joined by Garrett Quarles, General Motors manager of minority supplier development, and Ray Jensen, Ford Motor Co. director of minority supplier development.
Jensen also said informal, internal efforts would be made to assist minority suppliers in gaining the QS-9000/ISO-9000 certification needed to do business with automakers. 'We do recognize there is some hardship in getting QS-9000. We are willing to work as a group to make this thing a little more palatable,' he said, without specifying details.
Under terms of the initiative, automakers will be able to count sales by Tier 2 suppliers as part of their formal minority supplier recruitment efforts. The automakers have set a goal of buying 5 percent of their goods and services from minority-owned suppliers. They currently spend about $5.8 billion annually with minority businesses. That would grow to about $8.8 billion under the initiative.
Certified minority suppliers, meanwhile, may sell stock in their companies without losing minority supplier status. The SBA currently requires companies keep at least 51 percent ownership to be certified.
Under the pilot program's rules, minority suppliers that keep 10 percent ownership, control day-to-day management of their business, control their corporate board of directors and employ at least one quarter of their workers from socially or economically disadvantaged groups will continue to qualify for minority certification.
'This will allow them to fund growth through equity, rather than debt,' said Ford's Jensen. He predicted that only about 12 suppliers might be positioned to make a public stock offering. Jensen said that the program's impact will most likely be inclusion of more minority subcontractors as existing suppliers expand their business and purchase components or services through the minority community.
Jensen said that to be considered an automotive supplier, a company must have achieved quality certification; have been in business for at least three years; demonstrate financial soundness and show a positive cash flow; and demonstrate reliability as a manufacturer.