Toyota Motor Manufacturing North America Inc. wants to spend more money with minority-owned auto suppliers. To meet its goal, the company is enlisting the Big Three.
Toyota representatives traveled Nov. 26 to DaimlerChrysler's U.S. headquarters in Auburn Hills, Mich., to participate in a program that matches automotive buyers and minority-owned sellers. The Michigan Minority Business Development Council ran the event, called Project One. Ford Motor Co. conceived the program, said Daniel Mujahid, council project director.
The program pairs Tier 1 suppliers, automakers and minority-owned suppliers into teams that will mentor the minority firms and direct business to them.
Toyota hopes the program will help it meet a goal, set last month, of having minority-owned companies account for 7.5 percent of its North American Tier 1 content by 2005. That level would represent spending at least $800 million annually at current volumes with minority suppliers - $200 million more than Toyota is spending under its current 6 percent goal.
Toyota also is pressing its Tier 2 suppliers to increase minority spending, said Dennis Cuneo, senior vice president.
``When we include our Tier 2 purchasing, we'll be generating more than $1 billion in minority contracts,'' Cuneo said.
Toyota's commitment to minority-owned suppliers has grown through the years, due partly to the company's increased production volume. In 1997, Toyota spent $40 million on minority-supplied parts and services in the United States; that rose to $400 million by 2000, Cuneo said.
But Toyota faces similar challenges as the Big Three in fulfilling commitments to give more work to minority-owned suppliers. The potential suppliers often are smaller and less experienced than established auto suppliers.
Toyota has another challenge. It has a history of working with suppliers that run their factories and businesses in ways similar to Toyota's lean-manufacturing system. Those expectations have frustrated a number of established U.S. suppliers wanting to do business with Toyota.
``The way we do business is unique,'' said Teresa Hudson, Toyota's North American supplier diversity coordinator. ``We're trying to help smaller companies learn more about it. It takes some education.''
Last month about 1,000 people attended Toyota's annual Opportunity Exchange in Cincinnati, near Toyota Motor Manufacturing's North American headquarters.
Hudson said Toyota plans to devote more resources to supplier development. It is considering a minority supplier development program and is trying to work more closely with minority purchasing organizations.
But challenges remain. Toyota is having trouble finding qualified minority suppliers of certain items, such as steel, chemicals and resins, Hudson said.
``Those tend to be capital-intensive businesses, and we don't find minority companies able to compete there,'' she said. ``We can find all the service companies we could possibly want. We've got all kinds of injection molding companies. We've got more than enough people approaching us with warehouse and distribution services. But I'm looking for suppliers who can actually give us value-added content.''
Pooling its efforts with other U.S. automakers should help.
This is the first time Toyota will participate in Project One. About 400 people, representing nearly as many companies, took part this year in what is described as a mentoring program designed to help minority firms rise to the tough demands of the industry.
The matchmaking program has existed since 1998, but it has evolved into a different format in the past two years, Mujahid said. The council divides Tier 1 suppliers into teams of five to seven firms. Each team has one automaker and 10-11 minority firms.
Each team is graded, Mujahid said, on how well its members refer business to the minority participants.
One participant, Mark Wright, president of minority-owned assembly supplier TDS/US of Brownstown, Mich., hailed Project One as a positive catalyst for minority spending.
Wright said his firm, with $33 million in sales, is building a plant in Norfolk, Va., to supply Ford trucks with subassembled frames and fuel tanks. Wright attributes that business to his being on a Project One team with Ford and frame-maker Dana Corp.
``We're hoping to do something with Toyota now,'' Wright said.
Toyota's Hudson said collaborating with its Detroit competitors makes sense.
``This is not an area where we need to compete,'' Hudson said of Toyota and the Big Three. ``The objective is to find qualified minority suppliers. If we can all work together to help make them stronger suppliers, then that's great.''