Tech Industry

Ford hammers out deal with e-Steel

The automaker taps the online steel business-to-business exchange to streamline the way the company buys steel products.

Ford Motor has tapped e-Steel, an online steel business-to-business exchange, to streamline the way the world's second largest carmaker buys steel products.

The two companies entered into a multi-year procurement deal with Ford's global suppliers. The automaker wants e-Steel to meld the outside suppliers and Ford's buyers into a cost-saving procurement system. New York-based e-Steel will oversee Ford's order fulfillment, claims, financial controls and audit reporting across its manufacturing and assembly operations, said Andrew Hinkly, Ford's director of raw material purchases.

"This initiative is an example of how Ford is accelerating its adoption of the Internet as a way to drive efficiencies throughout the value chain," Hinkly said.

Like many manufacturers, Ford is looking to the Internet and business-to-business marketplaces to help find the best deals on raw supplies, track the inventories of its suppliers, and cut down delivery time. Ford has been pushing hard into e-commerce of late. It has joined in a partnership with other automakers, including General Motors and DaimlerChrysler, to build a giant automotive parts exchange called Covisint.

Net study group Forrester Research anticipates that U.S. Internet commerce in the auto industry will surpass $212 billion by 2003.

Hinkly declined to give exact terms of the deal with e-Steel, but did say that as part of the agreement, Ford has taken a minority stake in the business-to-business exchange, the size of which will be determined by how much business Ford sends e-Steel.

Ford said it Will B2B's magic last?expects that it will buy between 4 million and 5 million tons of steel-related products through e-Steel.

Ford joins a list of Internet investor heavyweights who have backed e-Steel, such as Goldman Sachs, GE Capital, Kleiner Perkins and U.S. Steel. Among the firm's competitors is Commerce One, which partnered with steel manufacturer Ispat International in March to form an exchange for the metals industry.