Honda moves to increase diversity of supplier base

MIDDLETOWN, Ohio — Early last month, gasoline trucks owned by Hightowers Petroleum Co. started refueling a Honda Motor Co. in-house service station, where company employees buy gasoline.

For Honda — with a North American direct purchasing budget of $26 billion a year — it’s a small contract for a small business. But Stephen Hightower, a black entrepreneur who has run his family’s fuel delivery business since 1981, says it could lead to bigger things.

“Our goal is to expand,” Hightower said. “We want to become much larger in the Honda organization.”

It looks like he’ll have an opportunity to do so. Tom Lake, Honda’s North American purchasing chief, has taken steps to expand the automaker’s dealings with “diverse” suppliers, which includes companies owned by women, minorities and military veterans.

In an interview last month, Lake said 10 percent of the company’s direct and indirect purchasing budget in North America is earmarked for diverse suppliers.

Honda also has asked its Tier 1 suppliers to do more business with diverse companies. Lake did not disclose Honda’s purchasing targets for its suppliers, but he noted that Honda has played matchmaker.

In September, Honda’s 50 largest Tier 1 suppliers gathered in Columbus, Ohio, to meet and interview 250 diverse vendors that the automaker had vetted.

“We will track the results,” Lake said. “This is the first time we’ve had a Honda-exclusive event” to match diverse vendors with Tier 1 suppliers.

Honda’s efforts could help dispel the view among minority suppliers that it’s easier to do business with the Detroit 3 than with foreign automakers.

The Rainbow PUSH coalition, during its annual automotive con-ference last month in Detroit, graded automakers’ procurement policies. Honda, Toyota, General Motors and Ford received top ratings, while other automakers were rated fair or poor.

In an interview, Rainbow PUSH President Jesse Jackson said the report card has gotten automakers’ attention. “Some of them were embarrassed by the report card — genuinely embarrassed,” Jackson said. “We don’t have a talent deficit [among minority suppliers]. We have an opportunity deficit.”

Jackson believes purchasing executives would award more contracts to minorities if they get to know them personally. So he took Hightower and several other black entrepreneurs to Japan last year to meet senior executives at Honda, Toyota and Nissan. Lake participated.

The event was good timing for Hightower, who already was a Tier 2 supplier to Honda. He also had established a track record delivering gasoline to GM assembly plants so that GM could fill the tanks of vehicles coming off the assembly line.

Now Hightower is a Tier 1 supplier to Honda — albeit a small one — and he has secured a line of credit with Huntington National Bank in Columbus.

A lack of access to capital has been a longtime sore point for Hightower and his son, who helps run the business. Even though their customers include GM, FedEx Corp., AK Steel Holding Corp. and Kroger Co., the Hightowers struggled to line up financing for their fuel delivery business.

“I didn’t have any debt and I didn’t have any legal issues,” Hightower said. “I was able to get a line of credit when I didn’t need it anymore.”

But never mind all that; Hightower says he’s focused on expansion now. Counting the cost of fuel delivered, his petroleum business generates sales of $340 million a year.

“I should be doing a billion dollars’ worth of business,” Hightower said. “I don’t plan to stop driving until I exceed it.”

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