Internet sites and business issues relevant to Canadian processors and moldmakers (June 01, 2000)

Automakers dive into on-line purchasing

Newco — it could be the start of new heights of cooperation among the Big Three automakers, or it could be just another grandiose attempt to cash in on business-to-business e-commerce. Newco is the temporary name for a web-based exchange through which some automakers plan to conduct all their purchasing on-line. It has implications for plastics processors and moldmakers, both as suppliers to the automotive industry and as purchasers of goods used in automotive manufacturing.

After separately announcing initiatives for auction sites last fall, Ford and General Motors combined their efforts into the e-business venture called Newco with DaimlerChrysler in February. They were later joined by Renault/Nissan.

The latest development is an announcement that resin will be sold on the automotive industry exchange. At a recent meeting of the Automotive Parts Manufacturers Association (Toronto), Jean N. Mayer of Ford Motor Co. stated that any processor, not just automotive suppliers, would be able to purchase resin through the automakers exchange. The theory is that the bulk buying power of the automotive industry should translate to lower costs for raw materials.

“We will not force our suppliers to do anything,” says Fara Warner, a Ford spokesperson. “But we’re hoping this exchange will be the best tool to use.”

“Ford will be a customer of the exchange. We will move all of our transactions onto the exchange, so that will become the easiest way to perform transactions with Ford.”

It all sounds easy, but the practical details are still being worked out. At press time the Newco exchange was the subject of an anti-trust inquiry by the U.S. Federal Trade Commission.

To get some idea of what may be forthcoming, you can check out Ford Auto-xchange (1) and GM’s Tradexchange (2), two current e-business sites for suppliers.

Jerry Fedchun, president of APMA, says the association is monitoring the initiative, but so far “it is still in its infancy.”

Fedchun doesn’t forsee much change for suppliers of engineered products such as molds and plastic automotive parts except for possibly faster turnaround on bids and quotes.

There is already some e-business happening among auto suppliers. After launching Tradexchange in December, GM processed its first on-line orders worth $500,000 for mantenance, repair and operating equipment and conducted an auction of stamping presses on the site with 108 registered bidders.

Ease of purchasing and global supply could be the upside of a large business-to-business marketplace with worldwide reach. The headaches and costs of adopting a new, general purpose supply chain management tool will likely be the downside if this automotive marketplace actually coalesces into a widely used tool.

(1) www.auto-xchange.com

(2) www.gmtradexchange.com

Correction

I have become overwhelmed by the dot.com phenomenon. A site mentioned in the April issue was given the .com suffix in error. The Manufacturers Representatives Education Research Foundation can be found at www.mrerf.org. My apologies.