Several automakers and Tier 1 suppliers have made headway in their efforts to buy more from minority-owned suppliers. But though the industry is staring at a slowdown, there are opportunities to do even more.
General Motors says it will spend about $2.5 billion with minority suppliers this year and more next year. DaimlerChrysler says it wants to double its purchases to $4 billion a year within two years. Delphi Automotive Systems Corp., the largest supplier, will spend $460 million this year, and Visteon Corp., the No. 2 supplier, will spend $370 million. Ford, Toyota, Johnson Controls Inc. and Dana Corp. also have strong programs.
Now, even Tier 2 suppliers such as raw materials companies are searching for minority content. That is creating strong demand, which is very good for established minority-owned companies but can be frustrating for startup minority suppliers trying to get a piece of the business and for automakers seeking new suppliers.
The good news is that the number of minority-owned businesses is growing. Theoretically, it should be getting easier to find minority suppliers. The number of Hispanic-owned businesses in the United States is expected to double in the next few years. Meanwhile, suppliers must create minority content. That can mean joint ventures, partnerships and changes in manufacturing approaches, such as outsourcing labor.
The twin pressures on automakers and Tier 1 suppliers to deliver minority content and to cut costs present a new opportunity. Emerging minority-owned companies offer suppliers a chance to take some of the cost out of the product. Outsourcing labor or partnering with aggressive small companies is a way to cut costs. Those small companies can be minority owned.
Increasing the participation of minority suppliers is an opportunity. A little downturn must not change that.