DETROIT - Ford Motor Co. hopes sharing warranty cost savings with suppliers leads to better quality.
"We have plans in place to expand our warranty sharing agreements to include 95 percent of the components where suppliers have a direct influence on improving warranty performance," Ford Vice President Chris Theodore said last week.
Theodore is in charge of daily product development for North American vehicles. He spoke at last week's Automotive News PACE Awards ceremony in Detroit.
Ford, which lost $5.4 billion in 2001, has been plagued by quality problems. As part of a restructuring plan, the automaker hopes a renewed emphasis on quality translates to more vehicles sold, a larger market share and restored profits.
A Ford spokesman said the automaker would have to see at least a 5 percent improvement in warranty cost performance before a supplier is rewarded. He did not provide figures, but did say Ford was looking at reducing warranty costs for major components.
"The whole idea is to improve performance year over year," the spokesman said.
Theodore's speech hammered home another theme Ford says is crucial to the success of its turnaround plan - better relations. In this case, with suppliers.
"Suffice to say, we - OEMs - don't always remember to recognize our partners," he said. "Throughout our collective history, OEM-supplier relationships have not always been partnerships. Indeed, sometimes they were downright adversarial."
Theodore said Ford is focused on lowering costs while improving quality, speed and innovation. But he had a warning about reducing costs.
Said Theodore: "We're not talking about decontenting vehicles.
We're talking about decontenting waste."