DETROIT - Winning the alliance game requires more than cash, a product or market match and the willingness to be a partner. Qualities such as communication, establishing goals and understanding cultural differences between organizations can make or break a merger, joint venture or other partnership.
So says a group of automotive industry leaders speaking at a panel session Monday, March 5, at the SAE World Congress. Executives from such companies as Delphi Automotive Systems Corp., Dana Corp., General Motors and Microsoft Corp. all pointed to common themes on the execution side of alliances as critical factors in the success of such partnerships.
'The key to a successful alliance centers on how we focus our energies around integrating the organizations involved through establishing a clear purpose and common understanding of the goals and objectives,' said Guy Hachey, president of Delphi's energy and chassis systems business.
Even considering the complexity and challenges involved in forging alliances, automakers and suppliers have no choice but to find partners to succeed at the top level of the industry. Mergers and other partnerships are often the most efficient way to gain access to new product areas, geographic markets and customers.
'No one is big enough, smart enough and rich enough to go it alone anymore,' said David Cole, director in the Center for Automotive Research and management partner in the Environmental Research Institute of Michigan.
Dana executive Bill Carroll pointed out the benefits gained from his company's recent acquisition of a minority stake in Getrag Cie, a German maker of axles and other automotive components.
With that partnership, the Toledo, Ohio, supplier gained depth in the passenger car and European markets, as well as new technology. Getrag gained depth in the truck and global markets, plus access to capital, said Carroll, president of Dana's automotive systems group. Likewise, the Drive-Tek Ltd. joint venture formed with GKN plc gives each company added expertise in the design of advanced driveline systems.
GM also has benefited from alliance activity in recent years, said Rudolph Schlais, president of the automaker's Asian business.
He pointed to his company's partnership with Suzuki Motor Corp., which has resulted in the adoption of the Japanese company's YGM-1 small-car platform, saving engineering time and money for GM in developing its own product for that niche.
The new small car will go into production this September at a Suzuki plant in Japan and likely will be sold as a Chevrolet, Schlais said.
GM's equity stake in Isuzu Motors Ltd. offers another example of the economic potential for alliances.
The relationship gives GM added diesel engine expertise and allows Isuzu to better focus its limited research resources.
Isuzu's market for diesel engines, meanwhile, grows by several factors, he said.
'This is a win-win,' Schlais said.
Creating such a relationship - where both parties benefit more than if they continued alone - is another tenet for success in forging alliances. In the end, making those partnerships work is crucial to surviving in a rapidly changing business, industry leaders maintain.
Said GM vice president and SAE Chairman Arvin Mueller: 'The way this industry is running, at the end of the day the winners, the people who will still be around, will be those that have a global footprint.
'They have multibrand strategies, and those that address customer needs in regional markets will be winners.
'(Winners) are also those that are able to leverage global scale in this asset-intensive business of ours.'