Ford Looks at Possibility of Alliances - New York Times

http://www.nytimes.com/2006/08/24/business/24ford.html?_r=1&oref=sl...

August 24, 2006

Ford Looks at Possibility of Alliances

By MICHELINE MAYNARD

DEARBORN, Mich., Aug. 23 The Ford Motor Company is evaluating the prospects for alliances with other automakers even as it moves ahead with its own revamping efforts, people who have been briefed on Fords activities said Wednesday. The evaluation of possible alliances is being led by William Clay Ford Jr., who serves as chief executive and chairman of Ford, the second-biggest and the oldest American car company, these people said. They spoke anonymously because of the sensitivity of the talks. Mr. Ford is exploring the idea of alliances from two perspectives, these people said. He is studying which partners might be a good fit, and he is entertaining overtures from automakers that have approached Ford about potential arrangements. Despite its financial problems in North America, Ford could be a very attractive partner to many companies under the right circumstances, said John Casesa, an industry analyst with Casesa Strategic Partners. As part of the process, Mr. Ford spoke last month with Carlos Ghosn, the chief executive of Nissan of Japan and Renault of France, who is involved in similar alliance discussions with General Motors. The conversation was reported Wednesday in The Wall Street Journal. Investors appeared pleased by the news that Mr. Ford and Mr. Ghosn had spoken. Ford shares rose 34 cents, or 4.6 percent, to $7.76. Mr. Ghosns discussions with G.M. have been under way since last month. They center on a three-way alliance proposed by G.M.s biggest shareholder, Kirk Kerkorian. Teams from G.M., Renault and Nissan are looking at various ties among the companies and are expected to decide by mid-October whether to proceed with a venture. The conversation between Mr. Ford and Mr. Ghosn was described as perfunctory. In essence, Mr. Ford asked Mr. Ghosn to consider talks with Ford if discussions with G.M. did not bear fruit, people who had been briefed on the discussion said. They asserted that Ford had not had anything resembling formal discussions with other auto companies. But they said Ford had been sounded out informally by some competitors to see if it would consider an alliance.

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Ford Looks at Possibility of Alliances - New York Times

http://www.nytimes.com/2006/08/24/business/24ford.html?_r=1&oref=sl...

There is outreach of all kinds its not just Ford talking to people, its people talking to one another, one of the people briefed on Fords activities said. You have to be prepared, and game things out in a lot of ways. This person declined to say which auto companies were involved, but added, At this point, it is all really, really preliminary. Mr. Ford is taking the lead in the evaluations because of their strategic nature. But they are not taking up that much of his time. This doesnt mean Bill is sitting with his headset on, dialing up a bunch of people, this person said. If the company decided to begin conversations about a deal, Mr. Ford could be expected to draw on the expertise of Kenneth H. M. Leet, the former Goldman Sachs and Bank of America executive whom Ford recently hired as an adviser. In an interview earlier this year, Mr. Ford said the company, founded in 1903 by his great-grandfather, needed to look at every possibility, given the brutal competition in the American market. But he said his priority was revamping in North America, where the company is preparing to expand its turnaround plan. Ford is expected to announce details of the broader plan next month. The original plan, unveiled in January, called for Ford to close 14 factories and cut 30,000 jobs through 2012. Since then, Ford has reported roughly $1.5 billion in losses for 2005, cut its dividend in half and said it would reduce production 21 percent in the fourth quarter. The cuts were the biggest at Ford since the early 1980s. Regardless of any deal we might envision, the fact is that we have to fix our North American business, Mr. Ford said in an interview this summer. James E. Schrager, a clinical professor of strategy at the University of Chicago Graduate School of Business, said he thought Ford did not need to align itself with another automaker, although a Nissan-Renault linkup might make sense if it were done to bring Mr. Ghosn on board with Ford. Ford has alliances currently, most of which have not done much good for either party, Mr. Schrager said. Its not a game of size. Its a game of excellence. Everyones talked to Ghosn, he said. If I was Bill Ford, I would be talking to Carlos Ghosn, too. Alliances are nothing new to Ford. It has management control of Mazda, it operates a joint venture with Peugeot to produce diesel engines and it licenses hybrid-electric vehicle technology from Toyota Motor. The financial clout of Toyota, which passed Ford for the first time in July to rank as the second-biggest automaker in the American market, clearly would make it the top choice of any auto company looking for a partner, analysts said. Toyota has participated in ventures with other companies, notably G.M., with which its builds cars in

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Ford Looks at Possibility of Alliances - New York Times

http://www.nytimes.com/2006/08/24/business/24ford.html?_r=1&oref=sl...

California, and it owns stakes in other companies, like Fuji Heavy Industries, the parent of Subaru. And Ford and Toyota held a year of discussions in the early 1980s about a joint car-building venture before Toyota ultimately linked up with G.M. Thus far, there have been no discussions between Ford and Toyota officials in North America, a senior executive at Toyota, who spoke anonymously because any discussions would be private, said Wednesday. Mr. Casesa said Ford could be an attractive partner for Hyundai of South Korea, especially since it once owned a stake in Kia, which Hyundai controls. Ford could also be ripe for a venture with an emerging Chinese auto company, Mr. Casesa theorized. Another option could be to expand its alliance with Peugeot, one of Europes strongest companies, which has not sold cars in the United States for two decades. But Mr. Casesa agreed that the company had much more important matters than striking a deal with someone else. Theres pressure to deal with the near-term financial crisis, theres pressure to make some decisions about management and then theres pressure to make some long-term strategic decisions, he said. This falls into that category.

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