HAMILTON, ONTARIO (April 14, 11:15 a.m. EDT) — America's Big Three automakers are preparing to expand their combined online auction program to resins.
The plan will make it possible for processors of any size to buy raw material through the automakers' bulk buying system on the Web. That should translate to lower costs for raw materials, not just for pieces headed for the auto industry, but for any end user, said Jean N. Mayer, executive director of manufacturing procurement operations for Ford Motor Co.
Dearborn, Mich.-based Ford and its biggest competitors, General Motors Corp. and DaimlerChrysler AG, announced earlier this year they would create an electronic-business unit for online purchases of all supplies.
The resin program will operate as a satellite of that still-unnamed exchange company, Mayer said April 13 at the Automotive Parts Manufacturers' Association annual meeting in Hamilton.
"This is not just about pressing ways to get lower prices for the (automakers), but for everyone in the supply chain," she said.
It's too early to say what impact it will have on the carmakers' partners, said Jane Leong, marketing manager for ABC Group of Rexdale, Ontario, which produces a variety of plastic trim and fuel-system parts.
"It's all very preliminary," she said. "They're just starting to talk about it now."
The auction business, now operating under the title Newco, will host the online auctions. The automakers and all of their suppliers can join in the purchases for standard resins.
The companies can get a better price just through the sheer size of their combined orders, Mayer said.
"That's where the strength of the exchange lies," Mayer said. "You get more people involved."
The automakers will not track which plastic is going to which program, she said. In fact, the carmakers want to encourage processors to buy resin intended for nonautomotive applications through the exchange.
The automakers' resin-selling plans could be at odds with a new injection molders' e-marketplace, announced April 5 by BASF Corp., Bayer AG, Dow Chemical Co., DuPont and Ticona/Celanese AG. Those companies want processors to buy resin and other products on their unnamed, Web-based site.
One founding member, DuPont, said it will encourage partnerships with the automakers' exchange to integrate supply-chain activities.
"It will be up to individual suppliers to determine their own individual strategies for participation in auctions on this site or any other," said Diane T. Smith, DuPont global director for e-commerce strategy, based in Geneva, Switzerland.
The carmakers' exchange program will focus its first satellite commodity purchase program on steel. That should begin operating this year, Mayer said.
Resins will follow soon afterward, taking advantage of lessons learned in launching the steel program.
"The goal (in e-commerce) is not to move costs along the supply chain, but to reduce the costs for everyone," said Ronald D. Pniewski, executive director, North American planning, for Detroit-based GM.
In the meantime, the businesses are meeting with a variety of their suppliers to determine how they should set up the resin program.
"We're still figuring out the best way to logistically manage it," Mayer said. "We will look to the suppliers for advice. They will definitely be a factor in how we structure it."
If auctions can reduce resin price pressure, automotive suppliers can concentrate on bigger issues, Mayer said.
"They need to get together to think about the implications of where their values are in the supply chain in the future," she said.
And value is the one thing no one should forget in the midst of the online hype, said Bruno Dehler, manager of supplier support and purchasing strategy for BMW of North America Inc.
A company with a healthy bottom line has the cash needed to develop the new technologies that sell cars, he said.
"We have to have the innovations to make new products, and for that you have to have money," he said. "We're relying on suppliers for those innovations.
"E-commerce wants to make everything on the same level, but we need to show (customers) what makes our cars different."