Ford, Toyota See Alliance Potential
Executives Envision Limited Tie-Up,
Sharing of Hybrid Technology
By NORIHIKO SHIROUZU and JEFFREY MCCRACKEN
January 22, 2007
Toyota Motor Corp. and Ford Motor Co. are sending more signals that they may want to establish deeper ties.
Speculation that Toyota and Ford might be edging toward some form of alliance has heated up since a meeting in mid-December between Ford Chief Executive Alan Mulally and Toyota Chairman Fujio Cho.
• The Situation: Following a December meeting between Ford CEO Alan Mulally and Toyota Chairman Fujio Cho, the auto makers are separately considering the pros and cons of an alliance.
• What's at Stake: Toyota fears political pressure in the U.S. as Detroit swoons. Ford may see potential in Toyota's hybrid engines.
• The Bottom Line: An equity deal isn't considered likely, but people familiar with the matter say both are open to a partnership.
People familiar with the matter say the meeting was prompted by an invitation from Toyota, sent from Toyota's top brass to Mr. Mulally via a visitor to Dearborn, Mich., where Ford is based, in mid-October. That messenger, a friend of former Toyota Chairman Hiroshi Okuda, met with Mark Fields, president of Ford's Americas operations, and gave him Mr. Okuda's invitation to the new Ford CEO.
Part of Toyota's aim in courting Ford is diplomacy -- an effort to win what people familiar with management's thinking describe as political peace from the U.S.'s second-biggest automobile producer. Though protectionist rhetoric has abated significantly, Toyota officials remain concerned about a possible backlash as they continue to gain market share in the U.S. while Detroit's Big Three shut factories and ax jobs. Analysts expect Toyota to outsell Ford in the U.S. on an annual basis as early as this year.
Toyota also could benefit in a practical way if Ford agreed to use its gasoline-electric hybrid technology. That is in part because Toyota's momentum in establishing its hybrid design as an industry standard has slowed. GM has lured German auto makers DaimlerChrysler AG and BMW AG into a powerful alliance to develop a hybrid system of their own that they say is simpler than Toyota's. Other companies, including Honda Motor Co., are trying to go it alone.
Messrs. Mulally and Cho, after talking for more than two hours, ended the meeting by agreeing to meet again soon, a person familiar with the situation said. A Toyota spokesman said no further meeting has been scheduled between the two but stressed that Toyota remains open to the idea of forming a tie-up to share costs of developing new technology or joining hands in popularizing new technology. Toyota also has shared operations with GM, including an automobile assembly plant in Fremont, Calif., that it has run jointly with the U.S. car maker since the late 1980s.
"So long as it is a win-win for both parties and there is a reason for partnering...we're open to the idea of forming a partnership. I think anyone among major auto makers around the world could potentially be our alliance partner," Toyota President Katsuaki Watanabe said in an October interview.
Analysts say it is unlikely Toyota would seek to buy a stake in Ford, even though Toyota's market capitalization far exceeds Ford's. A primary obstacle is the 40% voting stock controlled by the descendants of Ford founder Henry Ford. Also, Toyota has generally avoided large -scale acquisitions and alliances with rival auto makers. Ford, meanwhile, has too many financial troubles to buy a significant stake in Toyota.
Even the most efficient auto makers are worried about a glut around the world of auto-making capacity and surging costs to pack cars with new technologies in part to meet increasingly stringent safety and emissions regulations. Those concerns tend to spur interest in alliances that can help bring down component or raw-material costs, or those for developing new technology, to give them an edge.
The December meeting, in Tokyo, was broad-based, and senior executives at Toyota said Mr. Mulally discussed his experience at Boeing Co., where he led its commercial-aircraft division before joining Ford in September. He said he studied Toyota's lean-manufacturing process and transplanted some of the Toyota-devised production and inventory-control techniques like just-in-time parts delivery to Boeing's overall aircraft-assembly operations.
Being a lean-manufacturing expert himself, those executives say, Mr. Cho was impressed by Mr. Mulally's knowledge. One of them said Messrs. Mulally and Cho "really hit it off" and predicted that their instant rapport may provide the springboard for a technical relationship of some kind.
"I don't know if Mr. Mulally realizes this," said one senior Toyota executive, "but if he asked for help or suggested a way to collaborate, knowing Mr. Cho, he would go out of his way to be responsive."
"Ford came out of that [Tokyo] meeting feeling Toyota was worried that politically there could be problems for it in the United States if Ford continued to struggle, so Toyota might want to do something that publicly looked like they were helping Ford, while it also marginally helped Toyota," said one of the people familiar with the matter.
This person said there would be more talks in the future between Ford and Toyota about pursuing some sort of technology-sharing venture
Executives Envision Limited Tie-Up,
Sharing of Hybrid Technology
By NORIHIKO SHIROUZU and JEFFREY MCCRACKEN
January 22, 2007
Toyota Motor Corp. and Ford Motor Co. are sending more signals that they may want to establish deeper ties.
Speculation that Toyota and Ford might be edging toward some form of alliance has heated up since a meeting in mid-December between Ford Chief Executive Alan Mulally and Toyota Chairman Fujio Cho.
• The Situation: Following a December meeting between Ford CEO Alan Mulally and Toyota Chairman Fujio Cho, the auto makers are separately considering the pros and cons of an alliance.
• What's at Stake: Toyota fears political pressure in the U.S. as Detroit swoons. Ford may see potential in Toyota's hybrid engines.
• The Bottom Line: An equity deal isn't considered likely, but people familiar with the matter say both are open to a partnership.
People familiar with the matter say the meeting was prompted by an invitation from Toyota, sent from Toyota's top brass to Mr. Mulally via a visitor to Dearborn, Mich., where Ford is based, in mid-October. That messenger, a friend of former Toyota Chairman Hiroshi Okuda, met with Mark Fields, president of Ford's Americas operations, and gave him Mr. Okuda's invitation to the new Ford CEO.
Part of Toyota's aim in courting Ford is diplomacy -- an effort to win what people familiar with management's thinking describe as political peace from the U.S.'s second-biggest automobile producer. Though protectionist rhetoric has abated significantly, Toyota officials remain concerned about a possible backlash as they continue to gain market share in the U.S. while Detroit's Big Three shut factories and ax jobs. Analysts expect Toyota to outsell Ford in the U.S. on an annual basis as early as this year.
Toyota also could benefit in a practical way if Ford agreed to use its gasoline-electric hybrid technology. That is in part because Toyota's momentum in establishing its hybrid design as an industry standard has slowed. GM has lured German auto makers DaimlerChrysler AG and BMW AG into a powerful alliance to develop a hybrid system of their own that they say is simpler than Toyota's. Other companies, including Honda Motor Co., are trying to go it alone.
Messrs. Mulally and Cho, after talking for more than two hours, ended the meeting by agreeing to meet again soon, a person familiar with the situation said. A Toyota spokesman said no further meeting has been scheduled between the two but stressed that Toyota remains open to the idea of forming a tie-up to share costs of developing new technology or joining hands in popularizing new technology. Toyota also has shared operations with GM, including an automobile assembly plant in Fremont, Calif., that it has run jointly with the U.S. car maker since the late 1980s.
"So long as it is a win-win for both parties and there is a reason for partnering...we're open to the idea of forming a partnership. I think anyone among major auto makers around the world could potentially be our alliance partner," Toyota President Katsuaki Watanabe said in an October interview.
Analysts say it is unlikely Toyota would seek to buy a stake in Ford, even though Toyota's market capitalization far exceeds Ford's. A primary obstacle is the 40% voting stock controlled by the descendants of Ford founder Henry Ford. Also, Toyota has generally avoided large -scale acquisitions and alliances with rival auto makers. Ford, meanwhile, has too many financial troubles to buy a significant stake in Toyota.
Even the most efficient auto makers are worried about a glut around the world of auto-making capacity and surging costs to pack cars with new technologies in part to meet increasingly stringent safety and emissions regulations. Those concerns tend to spur interest in alliances that can help bring down component or raw-material costs, or those for developing new technology, to give them an edge.
The December meeting, in Tokyo, was broad-based, and senior executives at Toyota said Mr. Mulally discussed his experience at Boeing Co., where he led its commercial-aircraft division before joining Ford in September. He said he studied Toyota's lean-manufacturing process and transplanted some of the Toyota-devised production and inventory-control techniques like just-in-time parts delivery to Boeing's overall aircraft-assembly operations.
Being a lean-manufacturing expert himself, those executives say, Mr. Cho was impressed by Mr. Mulally's knowledge. One of them said Messrs. Mulally and Cho "really hit it off" and predicted that their instant rapport may provide the springboard for a technical relationship of some kind.
"I don't know if Mr. Mulally realizes this," said one senior Toyota executive, "but if he asked for help or suggested a way to collaborate, knowing Mr. Cho, he would go out of his way to be responsive."
"Ford came out of that [Tokyo] meeting feeling Toyota was worried that politically there could be problems for it in the United States if Ford continued to struggle, so Toyota might want to do something that publicly looked like they were helping Ford, while it also marginally helped Toyota," said one of the people familiar with the matter.
This person said there would be more talks in the future between Ford and Toyota about pursuing some sort of technology-sharing venture