The panelists' view: At a time when Japanese automakers are moving into new markets, their suppliers are financially hard-pressed to follow them overseas. Tenneco Automotive's Frissora saw a buying opportunity, while Lear's Way saw a traditional Japanese mistrust of foreign ownership. And Delphi's Battenberg wasn't talking - Delphi's negotiations to buy a piece of Akebono Brake Industry were still under wraps at the time of this interview.
According to Bloomberg News Service, a Toyota spokesman said Delphi tried to buy a piece of the company, presumably to gain access to its keiretsu network of suppliers.
Battenberg: We have a number of partnerships with Japanese companies already. So we are continuing to look for opportunities in Asian countries, including Japan.
Do you want to expand into the Japanese market?
Battenberg: We have partnerships with three Japanese suppliers today. We would look at expanding if the opportunity were right.
Mark, what are you doing in Japan?
Frissora: We've been aggressive. We are trying to have relationships with keiretsu suppliers. They have gotten a lot more receptive to us having a larger ownership stake. We have technical agreements for strategic alliances, and now we are working at taking equity stakes in some of our partnerships. Two years ago, these partners never would have even discussed it. Now they are actually pursuing us.
Is that because Toyota and Nissan have signaled suppliers that they are willing to buy foreign parts, or is it because the suppliers are in financial distress?
Frissora: I think it's both. The keiretsu suppliers have resident engineers in the automakers' design centers in Japan. If you want to participate, you have to invest heavily to support the Japanese automakers. The easiest way is simply to take an equity stake (in a Japanese supplier).
We've had nice relationships with several different suppliers. That allows us to have easy access to them and take an ownership position. In a couple of months, we may be in a position to announce a couple of deals with a couple of keiretsu suppliers.
Do you expect huge changes following the Nissan-Renault deal? Does it mark the death of the keiretsu?
Way: I think there are some changes in atmosphere, but it's a long way from a major revolutionary change, where all of a sudden you'd see global suppliers operating in Japan.
It's been an exclusive market, and it was out of our hands. I know we would like to be there. We have looked at all kinds of alternatives. We've been going there since the mid-1980s, and we haven't figured it out yet. But we keep working on it.
Can you do joint ventures or acquisitions in Japan? Do you agree that you can't set up shop in Japan by yourself?
Way: I think joint ventures for us have worked very well outside Japan. Inside Japan, you can't even do that. We have not been able to get any significant portion of anything. But I think there is more opportunity now to do a joint venture or direct investment.
The U.S.-Japan business council met last week, and the Japanese were very sensitive about direct investment. It's still a far-out issue for them. They don't want that. It isn't happening very much.
Even with foreign investment in Isuzu, Suzuki, Mazda and Nissan?
Way: The doors aren't open for direct investment, but we'll keep trying.
Muhlhauser: Our biggest market position today is with Mazda. We've got our largest concentration of activity - primarily engineering support - in Hiroshima. I agree with Ken that it will be a long process. I think we'll get there. But they are very cautious about introducing American equity into the Japanese supply base.
We've been most successful serving Japanese automakers outside Japan. The biggest opportunity for companies like Visteon is to establish relationships in Japan but expect to serve them - or be tested - in markets outside Japan.
I think it's opening, but ever so slowly.
Following the Renault-Nissan merger, are you beating down the doors at Renault, asking for more business?
Muhlhauser: We made a major acquisition - we bought Plastic Omnium. That was a big plea that we are a serious player now. We are a major cockpit supplier to Renault. Obviously, Nissan will be looking to change its supply base to one that is much more global.
Ten years ago, we thought the Japanese suppliers had bullet-proof relationships with the automakers and that the keiretsu networks were superior to Western suppliers. Now it seems they are not globally competitive.
Frissora: The Japanese automakers are trying to expand in Europe. They are finding out that the keiretsu supply base doesn't have the financial capability or the aggressiveness to go ahead and put plants and people in place. In a lot of cases, they don't have the know-how.
We are finding that is an opportunity. If we want to help them in a joint venture in Europe, where we have plants, they are willing to give up some of their equity and their manufacturing and engineering in Japan in exchange for that.
The keiretsus are having difficulty raising the capital to set up an infrastructure in Europe. So we look at it as an opportunity because the keiretsus are talking to us in ways they have never talked to us before.
They want to go global, but they can't do it without somebody else.
Frissora: Exactly. They are very conservative. It's a big step for a lot of keiretsu suppliers to go to another region of the world. So they are looking for partners, and they are willing to give up things they weren't willing to give up before. At least, that's what we find in our product lines of struts and shocks.
Muhlhauser: In our case, not only do they want to know about my company, they want to know about me. I've spent a week at a time in Japan, just learning about Japanese culture.
They have become very wary of the American sales pitch, that we can do everything for everybody. A relationship takes years to develop.