Chrysler wants Tier 1s to use more minority suppliers

DETROIT -- In 2006, the Chrysler group will require Tier 1 suppliers to use more content from minority-controlled companies.

Chrysler wants 8 percent of content on each Tier 1 contract to be derived from minority-controlled suppliers, Jethro Joseph, Chrysler group senior manager of minority supplier development, told Automotive News.

In 2005 the requirement was 7.5 percent. In 2004 it was 7.0 percent.

Chrysler defines minority suppliers as companies in which black, Hispanic, Asian-American, Asian-Pacific or Native-American individuals own or control at least 51 percent of the enterprise.

"We would like to have our supply base reflective of our customer base," Joseph says. "And minority suppliers hire minority employees who buy our products and services."

In 2006, Chrysler's production and nonproduction sourcing from minority-controlled suppliers will total an estimated $3.5 billion to $3.6 billion, Joseph says. In 2004, the total was $3.4 billion, the company says.

By comparison, the Chrysler group's production and nonproduction sourcing will total an estimated $27 billion in 2005, he says. Chrysler's purchasing total includes sources other than Tier 1s.

Chrysler will not say how many Tier 1 suppliers achieve the goal for minority sourcing.

"We're not meeting our targets internally," says Curt Estes, director of purchasing at Siemens VDO Automotive Corp. in Troy, Mich. About 4 percent of purchase volume is minority-sourced, he says.

"There are efforts in place to address this," Estes says.

Suppliers operate in a tough climate today, he says, referring to consolidation of the global automotive supply base and bankruptcies among Tier 2 and Tier 3 companies.

"It's a difficult situation," he says. "Siemens has over 3,000 global suppliers, and our goal is ... less than 1,000. We're looking for a mix of healthy suppliers with diverse capability and, where we can, minority content."

Siemens requires that every program include at least one minority supplier on the sourcing panel, he says.

Lear Corp. is on track to achieve minority-sourcing goals in 2005, Vickie Piner, Lear vice president of purchasing for minority supplier development, told Automotive News.

"Our target as a company is between 8 and 10 percent of annual revenue," Piner says. "This year we are on target to meet the goal."

Fluctuating industry volume is an issue, she says. "But if our industry gets back to where it was a year ago, we will be back on target," Piner says.

The competitive environment is no tougher on minority suppliers than it is other suppliers, she says.

"There will always be opportunity," she says. "We are not looking at these companies because they are minority suppliers. We are looking at them because they are the best out there."

The Chrysler group is working to foster minority sourcing, Joseph says.

For example, in September Chrysler held a "Matchmaker" event, bringing together 1,500 suppliers and 200 minority suppliers.

Minority participants displayed products and services at booths covering four floors of exhibit space in Chrysler's headquarters.

The event also included a "five-minute speed-dating" get-together. Randomly selected minority suppliers were paired with Tier 1 executives in rotating five-minute intervals, similar to the speed-dating concept used by singles.

You may e-mail Mary Connelly at