DETROIT -- Ford Motor Co.'s purchasing chief wants the auto industry to push for changes in federal bankruptcy law that will make it easier to recover assets from suppliers that seek court protection from creditors.
Ford's senior vice president of global purchasing, Tony Brown, on Tuesday told an industry gathering at the Federal Reserve Bank Detroit Branch that the industry needs more changes in the bankruptcy code. The code underwent historic reforms in 2005 after several years of debate in Congress.
But automakers and suppliers still need to have easier access to assets like tooling when a company goes into bankruptcy protection, Brown said. When a Tier 1 supplier seeks court protection, for example, the manufacturer should be able to retrieve its tooling to continue production.
"Right now, things get locked down and swept up in the case," Brown told Automotive News following his speech.
About 15 major industry suppliers are operating under bankruptcy protection, industry officials said Tuesday. Six of those suppliers posted more than $1 billion in direct business with North American auto manufacturers in 2005, according to Automotive News research.
Brown said he first brought up the idea of bankruptcy reform at an annual industry gathering at The Greenbrier Resort in West Virginia last fall. He said other industries, such as public utilities and retail landlords, already have specific protection in the law.
Brown said discussions about seeking the law change remain preliminary and no sponsors for the bill have yet been arranged. He wouldn't say if other automakers or their associations have signaled an interest in joining the effort.
"They'll have to decide on their own," he said. "There are a number of things we can work together on."
In other comments on Tuesday, Brown said:
- Six companies on Ford's seven-month-old preferred suppliers list have won a combined $1.8 billion in new long-term contracts or have won extensions to their existing contracts. So far, Ford has named 32 companies to that list and it expects to name more in the near future.
- Some steel-dependent suppliers had years to work with Ford on taking the risk out of steel pricing. Brown said that when steel prices were low, those suppliers wanted to handle steel purchasing on their own and benefit from buying at low spot prices. But when steel prices skyrocketted, they asked for Ford's help. "I was prepared to de-risk that situation," Brown said. "But that never shows up in print." He said Ford has still been willing to help some of those suppliers.
"You don't want to see the steel bill I had last year," he said. "Both mine and some of it was yours."
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