When William Clay Ford Jr. and Jac Nasser inked their first deal together, they both got what they wanted.
With the purchase of Volvo Cars, Chairman Bill Ford advances his campaign to put a socially responsible, green face on Ford Motor Co. Simultaneously, Ford president Nasser accelerates his global growth strategy by creating a trio of luxury brands with worldwide marketing clout.
Bill Ford and Nasser are spending $6.45 billion of the company's $24 billion cash horde to pursue their corporate game plan. That leaves enough in the checkbook to continue shopping.
Even as he announced the Volvo deal on day 28 of his administration, CEO Nasser held out the possibility of more acquisitions.
'It's a very good time to be expanding the business. We're very eager to look at any opportunity that makes good sense for us,' he said. But, he cautioned, any potential deal has to fit Ford's culture, brand strategy and geographic needs. 'We're not about growth at any price.'
Nasser is impatient to increase revenue and sales volume around the world. By teaming Volvo with Jaguar and Lincoln, Nasser wants to craft a luxury lineup generating 1 million sales early in the next century.
Volvo fit Ford's acquisition template.
Ford is likely to consider teaming Volvo with the company's other brands in showrooms. The company is rolling out a worldwide dealer consolidation strategy that groups Ford, Lincoln, Mercury, Mazda and Jaguar vehicles under one roof.
Asked if Volvos will be sold beside other Ford brands, Nasser said, 'This is clearly one area of potential for Volvo and other Ford Motor Co. brands. At this point we would rather not elaborate on it.'
Bill Ford used his turn in the media spotlight to underscore a major theme of his administration: corporate social responsibility. The acquisition, he said, 'not only strengthens our product lineup but it strengthens our corporate reputation.'
'Volvo has a reputation for safety and environmental responsibility that is world class,' Bill Ford said. 'Volvo's culture adds to our values and to our social vision.'
Bill Ford signaled his intent to increase Ford's societal sensibility in September 1998 when he was officially declared heir to the Ford chairmanship. The great grandson of company founder Henry Ford, he has reitered that theme in subsequent public appearances.
Last week, he stated his goal for Ford Motor Co.: 'A good company delivers excellent products and services. A great company delivers excellent products and services and strives to make the world a better place.'
Bill Ford's effort to link Volvo and Ford in environmental kinship were part of a well-orchestrated effort by the Ford chairman and Nasser to cast their company as a non-threatening purchaser.
Nasser strove to portray Ford as 'a tremendously good home and custodian' for a diverse group of brands. He also took pains to point out that Ford is run by executives from varied international backgrounds, not solely by North Americans. Ford-owned Jaguar was invoked as an example of a brand that has grown under Ford's nurturing without taint to the character of the marque.
'You'll not see us go in there with guns blazing,' Bill Ford said. Noted Nasser: 'One of the things that won't change is the Swedishness of Volvo.'
Still, Bill Ford and Nasser clearly expect to integrate Volvo into Ford's brand portfolio and product development organization.
Ford has just completed an exhaustive study that pins identities on each of its brands. Lincoln is identified as the purveyor of American luxury. Jaguar is being shaped around three characteristics: elegance, sensuousness and originality.
That leaves room for the distinct image of Volvo as a safe, well-built, environmentally friendly upscale choice. And Volvo could easily be woven into the company's new all-in-one showrooms.
Volvo's present product plan has only two platforms: small-car and large-car. The S80, which was introduced for the 1999 model year, is the first off the new large-car platform. A wagon is next, due in early 2000, followed about six months later by a successor to the all-wheel-drive, V70 Cross-Country wagon. A successor to the S70/V70 sedan and wagon is due in 2001.
The new small-car platform should appear around 2002, replacing the present S40 sedan and V40 wagon. U.S. dealers get the present S40/V40 in September.
With the right to use the Volvo name on cars and light trucks, Ford could create a new family of products with a distinctive identity. Nasser would not elaborate on expanding the Volvo lineup to possibly include sport-utilties or sport wagons except to say, 'Clearly the Volvo brand has quite a lot of flexibility and versatility.'
But the Ford president made it clear that platform sharing is coming.
Asked if Volvo and Ford will share platforms, he said, 'At present, Volvo has very modern platforms, so in the short term that will not be needed. In the longer term, I certainly hope so,' Nasser said. 'Over time, more integration and more cross-fertilization will certainly be part of the business practice.'
Bill Ford said manufacturing Volvo products in additional assembly plants - and possibly in the United States - will be explored as product cycles and manufacturing plans are reviewed. 'Future sourcing is something we will have to look at. We don't rule anything out at this point,' he said.
Talks between the companies intensified in the last month, Bill Ford said. The product fit, geographic fit and customer fit between the two companies was evident from the start, he said. 'With the cultural fit we had to sit down face-to-face to find out if this was something we could both make work.
'If there was any event that pushed the negotiation into fast forward it was the feeling that they wanted us,' he said. 'Clearly, Volvo Cars wanted to be with Ford.'
Scott Merlis, managing director of Wasserstein Perella Securities Inc. in New York, characterized Ford's purchase as an example of 'the new growth-oriented Ford.'
'This is not just a story about consolidation in the industry,' he said. 'It's a more growth-oriented strategy. And they have more cash on hand to execute that strategy than anyone. This is a manifestation of the new culture. They move quickly.'