Unsurprisingly, I have written about Detroit in my Financial Times column this week. Blog readers may notice that I have reprised and expanded on some of the material in posts this week. Regard it as the director’s cut. You can read it here and post comments below.
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“FORD NEEDS MASSIVE CASH INFUSION TO AVOID BANKRUPTCY; CHINA’S AUTO FIRMS NEED EXPERIENCED PARTNERS->> IS A MERGER OR A NEW MULTI-NATIONAL COMPANY POSSIBLE??”
China’s indigenous auto firms, unarguably, are not ready to play in the “automobile design, manufacture and market” big leagues. Facilitated with a little imagination, helping them get to this level could be beneficial both for struggling-to-be-viable, accomplished developed world firms such as Ford, and the automobile industry generally…..
Ford is looking to balance their billions-in-the-red troubled books, but not looking to exit the United Kingdom- or the ‘outside USA’ auto-markets- such as China.
China possesses two things that Ford is urgently in need of:
1) mountains of cash looking-for-a-place-to-be-applied, through, among other things, its huge Sovereign Investment Funds;
2) highly ambitious, hard-working but inexperienced automobile firms anxious to form truly empowering* ‘partnerships/mergers’ with developed-world-nations’ automobile companies…
* China’s govt/ its auto firms are looking to form, at least close to, ‘equal partner’ joint ventures- or set up new multi-national corporations- with automobile companies that possess:
- extensive dealership presence in advanced markets such as North America, EU nations, Japan, etc;
- proven research and development expertise and car design capabilities;
- proven competencies in marketing their products;
- broad vehicle type/brand product ranges….
Even without the Land rover and Jaguar units it’s attempting to sell, Ford has all of the above attributes.
Getting these two, perhaps unlikely, partners together- with help from the United Kingdom govt- could go a long way to revitalizing and securing the British-brand auto industry and would be beneficial for UK plc generally:
the British govt ought to be looking at ways of assisting Ford- on a temporary basis, while discouraging a sale by Ford of its Land rover and Jaguar units to India’s Tata motors.
While maybe appearing as a ‘quick fix’ to Ford, a south Asian (Indian) sale of Ford’s units to Tata, would in the long run, be a recipe for disaster… like throwing 2 lumps of lead into the sea and expecting them to float.
Tata has:
- zero car dealerships in any of the world’s main and most vital auto markets such as: North America; the EU; Australia; China; South Korea; Japan; etc.;
- a non-existent ’saleable in the developed world’ auto product-range; and
- is without research and development expertise, and without sufficient cash-flow or funding base to develop this.
Land rover and Jaguar need to be part of a successful, technologically competent auto firm which has: dealerships world-wide; a broad product range of vehicles (with which to generate cash flow and hence pay for research and development and new-vehicle design and marketing); and which has demonstrated competent marketing capabilities in all of the world markets in which Land rovers and Jaguars are currently and may in the future be sold.
Instead of an Indian sale, the UK govt and Ford, working with east Asian interests such as China (and/or South Korea) could be the most productive way ahead for all parties…
Setting up a new, UK majority-owned auto/transportation-technology company (with Ford UK retaining a minority interest)… encompassing Land rover and Jaguar, and with the ‘new’ company afforded long-term licensing-for-manufacture agreements with Ford- for several of its models and/or engines- would be one way of doing this.
Obtaining the significant participation of 1 or 2 of the up-and-coming, effervescent- and technologically capable- east Asian auto firm(s) (such as a KIA or a Suzuki) in the new firm, would give it both international reach and product-range scope.
Possibly most importantly, bringing in the govt of China/its passionately ambitious auto firms as major shareholder(s)- and part-funder- would make the project viable and productive in both a business and a multi-lateral, foreign-policy/trade-relationship way.
It would also provide Ford with a ‘laudatory’ presence in the world’s most lucrative & fastest growing car market: China.
The formation of a ‘new’ multi-national ‘part public’/'part private’ auto firm (with UK govt support) encompassing Land Rover, Jaguar and several brands under license from Ford, and with China’s participation as, at least close to, an ‘equal-partner’ - could be beneficial for all concerned….
Roderick V. Louis,
Posted by: Roderick V. Louis | January 17th, 2008 at 4:03 am | Report this commentVancouver, BC, Canada,
ceo@patientempowermentsociety.com