Ford, Its Suppliers Rocky, Seeks Shift on Chapter 11

U.S. automakers should be granted a special provision under bankruptcy law that would protect them from production disruptions if key suppliers entered Chapter 11, a Ford Motor Co. executive said Tuesday.

Tony Brown, who oversees the purchasing of more than $90 billion in parts and materials for Ford, said the provision would grant automakers access to proprietary tooling technology if suppliers are in bankruptcy.

Tying up expensive tools in the lengthy bankruptcy process would trigger costly shutdowns for automakers and companies in the supply chain, said Brown, Ford’s senior vice president for global purchasing.

The recent changes to U.S. bankruptcy law “didn’t reform things enough in our opinion,” Brown said, adding that Ford was lobbying lawmakers for the special provision.

Brown conceded that he was seeking special treatment for the troubled U.S. auto industry, which has been rocked by the bankruptcy of major suppliers including Delphi Corp. and Tower Automotive Inc.

“We need it and in my opinion we deserve it,” he said.

Delphi, which is restructuring under bankruptcy protection, is negotiating with its unions for deep labor cost cuts that it says are needed for it to emerge from Chapter 11 as a competitive company.

A strike or work stoppage at Delphi has been seen as potentially crippling for General Motors Corp., which spun off the supplier in 1999.

For its part, Ford last year was forced to take back the unprofitable operations of former subsidiary Visteon Corp. to keep the supplier out of Chapter 11.

More than 20 of the largest 150 auto suppliers have filed for bankruptcy protection since 1999 in the face of rising materials costs, dwindling market share for the Big Three American automakers and increased imports of parts, according to the Federal Reserve.