Major automakers including General Motors Co. and Toyota Motor North America have stopped tracking how much money they spend with minority-owned suppliers, ending a long-held practice in the auto industry amid the Trump administration’s crackdown on diversity initiatives.
GM and Ford Motor Co. supplier diversity programs, among the oldest in American business dating back to the late 1960s, helped set the benchmark for corporate America. The Detroit 3 took pride in spending some $25 billion annually with minority-owned companies — until a series of executive orders earlier this year turned that into a potential liability.
Presidential directives aimed at ending “illegal discrimination” and restoring “merit-based opportunity” have automakers scrambling to protect themselves from potential lawsuits amid a broader shift away from DEI programs in the corporate world.
For the first time in decades, GM this year stopped counting the dollars it spends with diverse suppliers due to legal reasons, a person familiar with the matter who asked for anonymity told Crain’s.
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It is not clear whether Ford and Stellantis NV have also stopped tracking diverse supplier spending. Spokespeople for those automakers declined to answer the question.
Their silence on the topic speaks to a conundrum for carmakers. Up until those executive orders were signed, automakers were happy to showcase their diverse procurement efforts, competing with each other to be the biggest spender in the space.
Now corporate America is retreating from diversity, equity and inclusion programs. Companies from Ford and Walmart to John Deere and Harley-Davidson have publicly rolled back DEI initiatives, ended participation in external culture surveys and diluted corporate language related to diversity.
What’s more, initiatives intended to help minority-owned suppliers are facing turmoil within — from a high-profile legal fight between the country’s largest Black-owned auto supplier and an industry group tasked with uplifting minority companies, to a power struggle between the National Minority Supplier Development Council and regional affiliates throughout the country.
Internal policy changes at the automakers related to procurement tracking indicate that the anti-DEI orders are impacting not only public corporate messaging; they could change the way companies conduct business.
In the past, automakers have pointed to the financial benefits of boosting supplier diversity, arguing that it’s more than just checking a box. An inclusive procurement process fosters innovation, the thinking goes, and cars sell better when their makeup reflects a diverse consumer base.
There are efforts among automakers to maintain supplier diversity work, according to people familiar with the situation. But they do so under the radar to keep the DEI bullseye off their backs.
“I think these orders are pretty clear that the administration means business with respect to trying to eliminate DEI across the board,” said Michelle Crockett, a labor and employment attorney at Honigman. “There’s huge potential exposure there for the automakers and other companies.”
Federal contractors are especially at risk, added Crockett, whose practice in Detroit has been consumed by DEI-concerned clients in recent weeks. That’s likely a big reason why automakers are being extra careful to comply with Trump’s orders.
Ford, Stellantis, GM and Toyota contract with the U.S. government to sell vehicles and other services. The Detroit 3 are also relying on federal electric vehicle manufacturing subsidies promised by the Biden administration, to offset billions of dollars in U.S. factory investments over the past three years.
While tracking diversity spend itself would not seem to run afoul of Trump’s orders, there is a gray area, Crockett said. For example, using that data to justify preferential treatment of certain demographics, or only allowing certain groups access to procurement funds, could be problematic.
“There’s no clear roadmap given as to what may be illegal in this context. It’s all sort of amorphous,” she said. “To be safe, companies are basically conducting what I call equity audits and doing some risk assessments.”
Automaker spending
GM was the first automaker to establish a formal supplier diversity program in 1968, according to its website. Per its most recent sustainability report, the company spent about $8.5 billion with North American diverse suppliers in 2023.
GM still tracks how much money it spends with small businesses through U.S. Small Business Administration reporting, according to the person familiar with the new procedures. It just no longer segments diverse suppliers from that broader group.
Supplier diversity remains important and core to GM’s values, the person said, but the company must take the necessary steps to protect itself. Officials at the automaker are evaluating all business areas, such as the minority dealer development program, to ensure compliance with the executive orders.
The Toyota source expressed a similar perspective. The company, which has said it spends more than $3 billion annually with diverse suppliers, aims to continue work in the space, the importance of which was learned from the Detroit 3 in the 1980s when the Japanese automaker first set up manufacturing in the U.S.
“Toyota takes a holistic approach to its supply base with various goals and strategies,” spokesman Rick Bourgoise said in an email to Crain’s. “It is important that we work collaboratively with all supplier partners to ensure Toyota produces and delivers world-class vehicles to its customers. We have nothing more to share about this.”
While the company eliminated supplier diversity spending targets, it is discussing the implementation of “opportunity” targets, or monitoring how many RFQs go out to small businesses, the source said.
While GM and Ford led the way on supplier diversity, Stellantis claimed the crown most recently as the leading automaker for diversity and inclusion in 2024, as ranked by industry tracker Fair360.
It was, until recently, a bragging right for the company, which recorded $9.3 billion in diversity spend in 2023.
Ford bought more than $7 billion worth of goods from minority-owned companies in 2021, according to a news release at the time. The company’s 2024 integrated report does not break out its diversity spending.
“Today, Ford’s Supplier Diversity and Inclusion initiative encompasses more than minority and women owned businesses and has expanded to U.S. small businesses, Veteran-owned businesses, enterprises led by individuals with disabilities, and LGBTQ+ entrepreneurs,” the report said.
Supplier worries
Minority-owned suppliers are worried about the long-term impact the policy changes could have on their businesses and the industry in general.
That was the throughline in conversations with owners and executives of four different minority suppliers. The officials spoke to Crain’s on condition of anonymity because of the sensitivity of the topic.
The owner of a large tier-one supplier said they didn’t expect any immediate threat to their business but feared that the industry’s commitment to diverse suppliers could quietly fade.
Another official in the same space told Crain’s that they believe “the playing field should be level” and “meritocracy should rule.”
“At the same time, I’m hopeful this isn’t a precursor for returning to the practice of deliberately excluding some groups,” the person said. “I think the OEMs know that today’s consumers are savvy and diverse, so they would be wise to remain mindful that they can attract or repel potential buyers of vehicles by how they source their parts and services.”
Two supplier owners said they don’t believe their minority status has any bearing on whether they win source packages today, but it did get them a foot in the door when first starting out.
Michelle Robinson, CEO of the embattled Michigan Minority Supplier Development Council, said she doesn’t see supplier diversity work slowing despite the political climate.
“I think there’s a tremendous amount of misinformation about what these programs are,” Robinson told Crain’s in a recent interview. “There’s not enough information about these programs, what they do, the fact that they are not affirmative action. People still have to compete. All we’re doing is opening doors for them.”
If it didn’t help their bottom lines, companies would stop doing it, Robinson added. “At the end of the day, people are going to hire the strongest and best talent. I think the programs that we’re focused on simply help you make sure that you’re leaving no stones unturned to find that talent.”
Scorecard retired
Since 2012, Rainbow PUSH has scored the diversity efforts of major automakers in areas such as employment, procurement and dealership composition. The organization, founded by the Rev. Jesse Jackson Sr., sought to hold companies accountable for steady improvement in those areas.
The group’s Automotive Diversity Scorecard did exactly as it was designed to do, but it has run its course, said John Graves, chairman of Rainbow PUSH’s automotive program.
“The report card is being retired to the hall of fame for a job well done,” Graves told Crain’s. “There’s not a company that has not improved over the last several years.”
To replace the scorecard, Rainbow PUSH is working on a brand equity index that assesses the industry as a whole, rather than individual companies. It was the organization’s decision to change its flagship survey, Graves said, though external forces were certainly at play.
Ford notably withdrew from last year’s scorecard, though the automaker continues to sponsor the annual event and “value our longstanding relationship” with Rainbow PUSH, a Ford spokeswoman said.
Like many other companies, Ford said it would no longer participate in surveys such as the Human Rights Campaign’s Corporate Equality Index.
Graves said the annual event will continue with participation from Detroit 3 purchasing executives, and that scrapping the scorecard ensures there is “no undue pressure on partners.”
“We are responding to the times,” he said. “We don’t want to leave our partners exposed in any kind of way.”
While DEI is under attack by the federal administration, it is more important than ever that diversity stakeholders stand united, Graves added. That’s why he is “saddened” to see the lawsuit between the Piston Group and MMSDC, an “advocate for minority businesses” against the “best that we have to offer as an African American company.”
That bitter legal fight, which has dragged on nearly four years, has embarrassed automakers and caused divisions within the industry.
“I’m not taking sides one way or another. It’s a legal issue,” Graves said. “But I’m saddened that we’re not working together, especially in these times.”
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