DETROIT - Auto suppliers found one sign of encouragement in Ford Motor Co.'s restructuring plan - the automaker will give back a portion of parts cost savings.
The shared savings program, reminiscent of the old Chrysler Supplier Cost Reduction Effort program and similar to an existing General Motors initiative, was the best possible outcome of Ford's restructuring for the supply base, one supplier said.
Ford spends about $50 billion annually on outside purchasing. The automaker believes suppliers can find $3 billion in cost savings if given an incentive to share in them.
Some worried Ford would attempt a unilateral price cut demand.
Ford, instead, said it would dedicate 300 engineers to work with the supply base on cost-reduction targets.
Suppliers will get 35 percent of any savings, while Ford retains 65 percent.
Ford has called the initiative the Design Cost Savings program.
"We want cooperation with suppliers to get their best ideas," Ford President Nick Scheele said.
A Ford spokesman would not reveal the overall goals of the cost-reduction.
But it's the first time Ford is sharing savings as well as allowing product design changes to count toward annual price-reduction expectations, suppliers said.
The shared approach also doesn't jeopardize quality the way across-the-board demands can.
"It's a very positive thing because it's a motivator," Siemens VDO Automotive spokesman David Ladd said. "It inspires suppliers to work with them because there's something in it for us. And it builds trust."
Ford's intention to focus more on its luxury brands and innovation also will help high-tech suppliers such as Siemens VDO, Ladd said.
Including a wiring harness joint venture, the company does $900 million of annual business with Ford and is growing.
Suppliers with exposure to the plants and programs that Ford plans to slash stand to suffer with the decline in business.
A Visteon Corp. spokesman said Ford's largest supplier will be affected by plant shutdowns.
Visteon is evaluating overtime and shift reductions to align its costs with customer schedules. Still, Ford's plans to introduce 20 new or redesigned products, focus on luxury lines and share the savings are positive, he said.
The inclusion of design changes into cost goals also helps, said William Kozyra, president of Continental Teves North America, which gets 36 percent of its revenue from Ford.
In a world where production is increasingly efficient, design changes offer the greatest opportunity for savings, he said.
Continental Teves has delivered annual price reductions of 4 percent to 6 percent to Ford in recent years, while savings of 8 percent to 10 percent were achieved under the old Chrysler SCORE plan, Kozyra said.