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Reports: Ford, GM discussed allianceBy Bill Vlasic
THE DETROIT NEWS
Tuesday, September 19, 2006
DETROIT — The volatile conditions in the American auto industry led Ford Motor Co. to briefly discuss a possible alliance with rival General Motors Corp. in July.
But after an initial meeting between the chief financial officers of GM and Ford, both companies dropped the notion of cooperating in areas such as purchasing and human resources.
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Both GM and Ford declined to comment Monday on an article reported in the trade journal Automotive News, and confirmed by other publications, that said the two companies discussed a merger or alliance.
However, sources at the two automakers downplayed the level of the discussions and said no talks are ongoing or planned.
Still, the fact that GM and Ford, fierce competitors for decades, would consider teaming up on business matters illustrates the changing landscape of the U.S. industry.
While Asian automakers are building new factories and boosting sales, GM and Ford are slashing jobs and vehicle production to match their shrinking market shares.
In July, GM was thrust into alliance talks with Renault SA of France and Nissan Motor Co. of Japan. The talks, which are expected to conclude in October, were initiated by one of GM's largest shareholders, billionaire investor Kirk Kerkorian.
With potential global deals on the table and competition at a fever pitch, it's not surprising that the two biggest U.S. automakers would explore cooperative ventures that could save them money, said one industry analyst.
"I think they have looked at a lot of things, but that doesn't mean they pursue them," said David Cole of the Center for Automotive Research in Ann Arbor, Mich. "But they're always looking.
"Collaborating . . . is part of how they're doing things," he said.
Cole said that an outright GM-Ford merger is unlikely and that the companies carefully weigh antitrust issues during the lower-level cooperation that now takes place on such issues as hybrid vehicles, production technology and components.
Even if GM and Ford don't merge, some other automakers will as the industry further consolidates, Cole said.
Ford's chronic labor cost problems and its shortage of interesting models give GM little reason to seek a close alignment, said analyst Charles Fleetham of Project Innovations in Farmington Hills, Mich.
"I don't see it from a business standpoint," he said. "They have the same high health costs, high union costs and ineffective white-collar work force that they want to get rid of."
Ford declined to comment publicly on the matter.
"My job is to keep everybody focused on our Way Forward (restructuring) plan and accelerating our results," said Mark Fields, Ford's president of the Americas. "If we discussed all the speculation that was out there, I think we'd probably spend a couple of days."
"As a policy, we don't confirm or comment on these discussions which, in many cases, never lead anywhere," said GM spokesman Tony Cervone.
In the early 1980s, GM had brief discussions with Honda about a possible alliance, and Ford and Toyota discussed a joint venture that would have called for Ford to build a version of the Toyota Camry. Instead, Toyota and GM set up a joint production venture.
Some examples of cooperation among automakers:
• The United States Council for Automotive Research, a joint project of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG, seeks to develop vehicles powered by hydrogen fuel cells and works on improving the manufacturing competitiveness of U.S. automakers, among other things.
• Renault SA and Nissan Motor Co. formed an alliance in 1999.
• Toyota Motor Corp. of Japan and GM have a technology partnership on hybrids and fuel cells.
• GM, DaimlerChrysler and BMW AG collaborate on developing gasoline-electric hybrid technology.
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