It's only a question of how deeply the knife will slice as Mazda's desperate cost-cutting measures take aim at its U.S. workforce this week.
The maker has signaled it will post a $1.2 billion loss when the Japanese fiscal year wraps up on March 31, its worst performance in 11 years, and only by offering more than a billion dollars in new stock is it likely to head off a more serious crisis. For now, anyway.
With long-time partner Ford Motor Company slashing its stake in its Japanese affiliate from 33 to just four percent since Alan Mulally was named CEO, even Mazda's top executive Takashi Yamanouchi admits it will be difficult to go it alone, Yamanouchi recently acknowledging his company is "actively" looking for new alliance partners.
Of course, Mazda is not alone. General Motors confirmed this month that it would enter into a far-reaching partnership with Paris-based PSA Peugeot Citroen. And Germany's Daimler AG has repeatedly expanded the coalition it formed two years ago with the Renault-Nissan Alliance.
"It's partner or die," insists Dr. David Cole, chairman-emeritus of the Center for Automotive Research, in Ann Arbor, Michigan.
Even Toyota has recognized it's better off sharing advanced powertrain technologies with other potential leaders.
Alliances fall into a variety of different categories and may be motivated by very different goals. But what experts like Cole stress is that they all must be entered into carefully and nurtured much like a marriage in order to survive.
To underscore the changes in the automotive world, consider Toyota, a maker that, with the rarest exception, has always preferred to go it alone. It entered an alliance with GM in the mid-1980s only to gain experience in U.S. manufacturing. But suddenly, Toyota is inking all sorts of deals: with BMW, with Ford, even with the little California start-up Tesla Motors, which is taking a lead in developing the RAV4 EV.
The changing realities of the auto industry, driving by tough emissions and mileage mandates, make it difficult for even the biggest and wealthiest makers to do everything on their own – and though Toyota is generally seen as a – if not "the" – leader in green technology, it has recognized it's better off sharing development efforts in the most advanced powertrain technologies with other potential leaders.
The tie-up between Nissan and Renault was clearly one of necessity. As the new millennium approached, the Japanese maker was rapidly failing. The French manufacturer saw an opportunity to expand its global reach and significantly improve economies of scale. But the $6 billion price tag was staggering, leading former GM Vice Chairman Bob Lutz to famously suggest that Renault might do better and "take $6 billion in gold bullion, put it on a boat, take it to the middle of the Atlantic and sink it."
Time has proven otherwise. Last year, the Euro-Asian alliance collectively passed Toyota to become the globe's third largest automaker, behind only GM and Volkswagen AG.
The tie-up between Renault, Nissan and Daimler led many others to scratch their heads when it was announced in mid-2010. After all, Daimler had just emerged from its unhappy marriage to Chrysler. Why would it want to shack up again? Precisely because of the failure of the more expansive DaimlerChrysler deal.
That "merger of equals" never lived up to expectations – in part because the two partners never clearly worked out their specific goals, admits Daimler CEO Dieter Zetsche.
"What we did there (with Chrysler) is the exact opposite of what we're doing here," he explains. Only after completing the merger in 1998 did Daimler and Chrysler really get down to the specifics of seeing what they could do together and how. It resulted in plenty of resistance and the eventual failure of their partnership. The new alliance is more limited and focused on individual projects, the German executive insists, so "We have a clear understanding of what we want to do together."
Like a good marriage, chemistry is clearly important, and Rick Wagoner thought he'd found that elusive formula when he approved an expansive partnership with Fiat in 2000. The deal was supposed to save the two makers significant amounts of money by sharing work on platform and powertrain programs and on parts purchasing, where volume clearly can make a difference.
"The problem is that you have to stay on top of these things," Lutz told me during a recent conversation. "You have to set specific targets and timelines or nothing will get done."
That's precisely what happened – or didn't happen, if you prefer – with the GM-Fiat Alliance. While there were vague targets, there was little motivation to move on them and no one clearly accountable to ensure things happened. But there was plenty of infighting between the two makers. No one wanted to give up their platform or their powertrain – which translated into jobs – and let the other partner take over.
It ultimately cost GM $2 billion to exit the Fiat partnership, money it clearly couldn't afford to give away as its finances continued to crumble in the run-up to a 2009 bankruptcy. Fiat, on the other hand, was handed salvation. Though the promised savings from the alliance didn't materialize, GM's cash was a lifesaver at a time when its own survival was uncertain.
Ironically, that $2 billion ultimately positioned Fiat to step in as the white knight to save struggling Chrysler, after its own 2009 bankruptcy. Will that partnership pay off? So far, the signs are positive but it will likely take several more years to find out.
GM is perhaps the poster child for what not to do in an alliance. Along with the Fiat deal it has walked away from partnerships with Suzuki, Isuzu and Subaru parent Fuji Heavy Industries, none of the deals generating the promised returns.
Alliances can be as destructive as the most painful divorce.
So, why believe the new partnership with PSA Peugeot Citroen will work? Let's face it, there are plenty of skeptics. But company officials, including Opel chief executive Karl-Friedrich Stracke, insist the maker has learned hard lessons. "I lived the good life," he says, a bitter twist to the attempt at good humor, having been part of the team that had to unravel the GM-Fiat deal.
With the new alliance, "It's very clear we're looking for synergies," Stracke stresses, but this time, he insists, GM is going in with its corporate eyes wide open, goals clearly laid out and managers clearly to be held accountable.
Considering the U.S. maker's history, there's plenty of reason to remain skeptical. But few doubt that GM needs help in Europe. And there's a growing industry consensus that alliances provide a way to deal with such serious problems. But like a marriage, they can't be entered into lightly. And they can't be ignored along the way. Otherwise they can be as destructive as the most painful divorce.