The tie-up with VW is just one of the ways the Detroit automaker hopes to slash costs and improve its efficiencies.

Ford announced a joint venture with erstwhile rival Volkswagen, focusing on the development of commercial vehicles and electric and autonomous cars, according to Jim Farley, Ford’s president of Global Markets.

The tie-up with Volkswagen, announced Tuesday, is just one of the ways the Detroit automaker hopes to slash costs and improve its efficiencies.

Chief Executive Officer Jim Hackett expressed disappointment Sunday with his company’s 2018 performance, telling Bloomberg, “I want to tell you, I’m not happy. That should just be said.”

Ford could use some good news, considering the challenges it is facing. Its stock has been in the doldrums for more than a year and industry analysts have been questioning key parts of its strategy, including its decision to focus on sport-utility vehicles and other light trucks while largely abandoning passenger cars in the U.S. market.

With operations in the key markets of China, Europe and South America struggling, the automaker has big restructuring plans. It is expected to trim thousands of jobs in Europe alone where it currently employs 54,000 workers.

“There’ll be significant impact across the region,” Steven Armstrong, the head of European operations, announced last week, noting, “We have had periods of profitability but not on the level it should be.”

One way to deal with its problems, Ford has indicated, will be to partner up. It first confirmed talks with VW last June when it signed a memorandum of understanding, or MoU, with the German automaker, focused on commercial vehicles. Since then, sources at both companies have said, they have expanded the range of discussions significantly.

Farley confirmed that the talks have expanded but declined to discuss specific areas of focus.

One of the subjects reportedly under negotiation would see marketing and sales operations in specific markets essentially taken over by one of the partners or the other. Ford, for example, is a major player in North America, where VW is weak, while it’s the opposite in China, Europe and Latin America, where Volkswagen could play a dominant role.

If the alliance comes together, it would mark just the latest time that Ford and VW have seen joint opportunities.

In the 1980s, they pooled resources in the then-struggling Brazilian and Argentine markets. But as the region recovered VW decided to abandon the joint venture, AutoLatina. Because of the way things had shifted in South America’s two largest markets, Ford came out of the deal in a weak position and has never really recovered.

That said, Farley told NBC News that Ford has “a lot of institutional memory” and will make sure that any new deals avoid the traps and pitfalls of the past. Key will be finding “the right products,” he said.

“Balance is really very important,” said Farley.

 

Source: NBC News


 

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