Support for Small Business Suppliers is a Tide that Lifts all Boats
7/11/2014 2:47:00 PM
Rick Schostek, Executive Vice President, Honda North America, Inc.
When the White House asked Honda to sign a pledge in support of suppliers that are small businesses, there was never a moment of hesitation, because the goal of supporting small business is vital to the success of Honda in America.
It is a little known fact that Honda was established in America in 1959 with less than $125,000 in working capital. With $100,000 of that going to purchase a very small building in Los Angeles, we actually had to borrow money to buy a truck to deliver our motorcycles to dealers. We have never lost sight of the challenges of doing business as a small company.
Today, the small businesses that provide us with parts for our automobile, powersports, power equipment and aircraft production in America, and that provide services ranging from security to landscaping, are integral to Honda's U.S. sales, manufacturing and R&D operations, and we have a long and deep commitment to hands-on collaboration.
At the core of Honda's approach is our desire to establish long-term relationships with suppliers, based on trust and mutual benefit, and with a commitment to diversity.
So it was that on July 11, one of our suppliers, Billy Vickers, the president and chief executive officer of Modular Assemblies Innovations (MAI), of Dublin, Ohio, joined me in attending a roundtable discussion with President Obama at the White House. During the discussion Honda signed a pledge to assist small business suppliers by reducing capital needs and providing insight into best practices.
We recognize that small business suppliers work on tight budgets with capital as a premium. These constraints can stifle growth, innovation and efficiency. Additionally, while smaller suppliers may have opportunities to improve their efficiency, they often lack the resources and expertise, which can put them at risk of falling behind their big business competition.
As Honda has expanded its manufacturing operations, we often work with existing, smaller companies to expand their business to serve our needs. For instance, Billy Vickers's company, MAI, has grown in Ohio, Alabama and Indiana, along with the growth of Honda operations in these states, and now employs more than 250 associates.
One of the ways in which Honda has supported a minority-owned business such as MAI is by providing adjusted payment terms, reducing MAI's upfront costs by assisting with the purchase of costly components and giving the company the cash flow it needs to operate and expand its business.
We also provided on-site process engineering assistance at MAI to collaborate on best practices to help MAI improve its efficiency and quality in the company's manufacturing processes. Because of this teamwork, MAI has been able to grow its business and venture into new areas. All of these approaches are aligned with the White House pledge.
We will continue to pursue and expand these types of efforts to help our small suppliers grow and invest in the United States. The needs of each small business are different, but we understand reducing capital needs means the ability to expand, and learning from others is often the best way to improve efficiency.
Honda is no longer a small business. In 2013 alone, Honda purchased more than $23 billion in parts and materials from more than 530 suppliers across the country – that was a new record for our company. Further, Honda purchased another $10 billion in a wide variety of equipment, products and services from more than 5,000 MRO suppliers (Maintenance, Repair and Operational).
But we still operate with the spirit of a young and small business – and we are pledged to support other companies that are now in that position. It is a great "win-win-win" formula for the supplier, for Honda and for the U.S. economy as a whole.