Cooperate and Compete

Sergio Marchionne has probably caused more automotive executives afraid to answer their phone or open their email than anyone in a long, long time.

Sergio Marchionne has probably caused more automotive executives afraid to answer their phone or open their email than anyone in a long, long time.

That’s because Marchionne has been talking about some sort of tie-up with another company. Like an acquisition. And chances are he wouldn’t be the one doing the acquiring.

But even though he may be setting in motion a whole lot of eye rolls, in many regards he is absolutely right: There is too much redundancy in the industry and that can be ill-afforded by companies that are constantly walking the tightrope over a financial abyss.

Why should so many companies all develop the same parts, components, subassemblies, systems, etc., especially when, fundamentally, there isn’t a heck of a lot of discernable consumer difference between them?

That is, arguably, just waste. Or as the Japanese word has it, a word that seems more fundamentally descriptive: muda.

But maybe it doesn’t have to be an acquisition.

Maybe it just could be collaboration.

Maybe competitive companies could work together on the fundamentals and then create their distinctiveness on top of and within (e.g., tuning of everything from the suspension setup to the engine calibration) the common elements.

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This seems to be what the Renault-Nissan Alliance and Daimler are doing.

Last week they announced COMPAS: Cooperation Manufacturing Plant Aguascalientes.

Or more plainly: the two organizations are investing $1-billion in a manufacturing plant that will produce compact premium vehicles. First there will be an Infiniti in 2017. It will be followed by a Mercedes in 2018.

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Glaucio Leite, Chief Quality Officer (CQO) for COMPAS, a 24-year veteran at Daimler (his last position in Germany was overseeing the preparations for the final assembly of the next-generation E-Class at the Mercedes-Benz Sindelfingen), put his figure on some of the advantages of the approach: "By incorporating the best from both companies in terms of manufacturing and quality processes, we will produce top-quality products, maximize resources, and optimize costs at the same time. We are also making sure that both brands' quality requirements and identities are safeguarded.”

Quality.

Maximized resources

Optimized costs.

Are there any boxes they’re not checking?

Realize that they’re producing premium cars, not mainstream. Arguably, this means that the demands are much higher in terms of the expectations for the vehicles.

And yet they’re doing it.

Renault-Nissan Alliance and Daimler have been working together under a strategic cooperation agreement for five years.

Although there isn’t a whole lot of fuss made about it, it seems as though it must be effective.

Maybe some other executive(s) might go down this road with Marchionne.