GOTHENBURG, Sweden - To hear Volvo Car Corp. executives tell it, the marriage with Ford Motor Co. has been happy so far.
But they acknowledge that the honeymoon is over, five months after Ford bought Volvo Car. Now, they are getting down to the serious job of making their partnership work.
Because of the enormous disparity in size between Volvo and its new parent, Volvo officials know the difficulties that lie ahead.
'From the beginning, I have had the strong feeling that if we don't steer this process very hard, it will be extremely easy to get lost,' said Hans Gustavsson, Volvo product development chief. 'They are so huge and we are so small. It should be easy for them to swallow the Volvo organization.'
But that is not what Ford wants. When AB Volvo began to entertain the idea of selling its car division, Volvo officials realized they probably were not big enough to compete with giants like DaimlerChrysler.
SPREAD THE COSTS
They needed financial muscle to develop a new generation of engines and to maintain their lead in safety technology, for example. They needed econ-omies of scale, the kind modern global manufacturers are getting by sharing platforms among different brands.
Spreading those costs across a global organization could make savings possible. If all goes according to plan, Volvo's survival among the world's elite automotive brands will be assured.
Airplanes to and from Gothenburg are filled these days with executives from Dearborn, Coventry, Cologne and other outposts in the far-flung Ford empire. American and English accents now are commonplace in the Volvo cafeteria.
The companies have formed 19 teams to search for synergies in every possible area, whether it be finance, product development, information technology, purchasing, marketing, logistics or manufacturing.
The teams meet regularly in Gothenburg, Dearborn and elsewhere. They report to a four-man steering committee that consists of Wolfgang Reitzle, chairman of Volvo and head of Ford's Premier Automotive Group; Tuve Johannesson, Volvo president; William Cosgrove, Premier Automotive Group CFO; and Wayne Booker, Ford vice chairman. The committee meets at least once a month.
To keep the process from becoming too unwieldy, the individual project committees report to the steering committee through Bertil Thoren, Volvo's purchasing chief.
Volvo's department chiefs still report to Johannesson, just as they did when AB Volvo owned the company. But now, those executives also have responsibilities to their counterparts in Dearborn. Johannesson, in turn, answers to Reitzle.
Timetables for those projects vary, but Volvo has gained some immediate benefits.
In June, Volvo began selling cars in Mexico for the first time. Until then, it had not been able to do so because it does not manufacture there. Volvo had considered assembling cars in Mexico from complete knockdown kits. Volvo also may sell vehicles in other Latin American countries because of its affiliation with Ford.
The companies also have begun to reduce transportation costs by shipping finished vehicles together.
Volvo has been combining its financial affairs with Ford's. Scott Stewart, Ford's former controller of vehicle procurement costs, was appointed Volvo's CFO in June.
BIGGEST PREMIER PLAYER
Stewart has moved from Dearborn to Gothenburg to integrate Volvo's financial operations with Ford's and to combine accounting systems.
It will take longer to realize the benefits in such areas as product development and manufacturing.
Volvo product development boss Gustavsson talks weekly with Richard Parry-Jones, Ford's group vice president of product development. Parry-Jones visits Gothenburg once a month. Gustavsson visits Dearborn frequently.
The day after Automotive News Europe visited Gothenburg, Gustavsson hosted Nick Barter, Jaguar product development director. They discussed ways Jaguar and Volvo could work together.
Gustavsson said Volvo is looking to Jaguar for advice on how to preserve its strong brand image. Jaguar has a 10-year head start on Volvo, having been purchased by Ford in 1989.
Ford wants Volvo to evolve from a niche manufacturer of safe, stodgy station wagons into a full-line manufacturer of safe, fun vehicles for modern families.
If the plan succeeds, Volvo's annual sales will grow from about 482,000 cars worldwide now to nearly 600,000. That would make Volvo the biggest player in the Premier Automotive Group, Ford's new family of luxury brands that also includes Aston Martin, Jaguar and Lincoln.
'You have to realize it is not only traditional estate cars and wagons we are talking about,' said Johannesson. 'We are talking about a much broader definition ... of target groups - such as those who buy sport-utilities today.'