Tough time for supply boss to step in at FCA

DETROIT — Fiat Chrysler Automobiles has turned to an outsider to head its purchasing unit, continuing the company's trend of filling key roles with newcomers since CEO Mike Manley took the helm in 2018.

Longtime supplier executive Martin Horneck will run FCA's purchasing and supply chain operation as the automaker prepares to merge with PSA Group of France.

Horneck comes in during a period of supply-chain disruption caused by the novel coronavirus, which has disrupted manufacturing in places such as China and Italy. And a positive test by a worker at FCA's Kokomo Transmission Plant in Indiana last week could create complications in North America just as Horneck begins to familiarize himself with his day-to-day duties.

Darren Gifford, a partner at business advisory company Plante Moran in suburban Detroit, couldn't think of a much tougher scenario for starting a global purchasing job.

"Is this the worst possible time? If it's not the worst, it's probably close to it," Gifford told Automotive News. "To walk into the organization to head up a really large group within FCA and to be in the middle of a massive crisis at the same time. It'll be a good test of himself, but also his organization as well, because it can't be just him. His organization has to respond well, too."

Horneck, 57, a native of Germany, joins FCA after several stints in the auto industry. He had been a C-level purchasing consultant based in Naples, Fla., for the last two years, according to his LinkedIn profile. He was chief procurement and logistics officer for automotive paint supplier Axalta Coating Systems for nearly five years until February 2018, as the former DuPont unit was spun off with a public stock offering conducted by private equity company Carlyle Group.

At Axalta, Horneck cut $180 million out of $2.1 billion in annual direct and indirect materials purchases, he wrote on LinkedIn.

He shrank the company's supply base by 25 percent — after categorizing each of its 1,000 suppliers as "grow," "fix" or "exit" — and began a complexity reduction program that resulted in 25 percent fewer part numbers.

Horneck also said he produced $300 million in savings as chief procurement officer for TRW Automotive in suburban Detroit from 2008 to 2013.

He previously worked for transmission supplier Getrag and General Motors' powertrain unit.

FCA, in a memo last week obtained by Automotive News, said Horneck is charged with "leading and coordinating various work streams associated with the integration planning for the upcoming merger with PSA." He also will have to build up the company's relationships with suppliers, which Gifford said is an area FCA has been working to improve.

FCA finished last among the six largest automakers in North America in Plante Moran's 2019 North American Automotive OEM-Supplier Working Relations Index Study. The automaker's score in the benchmark study declined for a sixth consecutive year.

"They really do rely on the suppliers, not only for delivery of the product at high quality and good price, but also for innovation and new ideas," Gifford said. "They have to get into a position to take advantage of that."

Horneck joins a list of recent company outsiders that includes North America COO Mark Stewart, who came from Amazon in December 2018; Christian Meunier, the former global president of Infiniti who became global president of Jeep last year; communications chief Simon Sproule, who came from Aston Martin in February; and Davide Grasso, a former CEO of Nike's Converse shoe brand who was named COO of Maserati last summer.

Horneck's hiring as an outsider in a top purchasing role is fairly unique.

"It is not common for an OEM to bring in an executive purchasing leader from outside of the organization," said Julie Fream, president of the Original Equipment Suppliers Association, though she said such hires have happened occasionally.

FCA also went outside the company last year to hire Carl Smiley as its chief purchasing and supply chain officer from sensor manufacturer TE Connectivity.

While under the ownership of Cerberus Capital, Chrysler hired John Campi, who had worked with CEO Bob Nardelli at Home Depot, as its purchasing chief.