Wil-Mor Technologies: Is There a Crisis?

Wil-Mor Technologies: Is There a Crisis?

As of February 1997, there are significant problems in the relationship between Wilson and Morota, the respective American and Japanese auto-manufacturing suppliers that have created the Joint Venture Wil-Mor. There is a major concern that this JV is still unprofitable (since its launch in 1994), despite its relative successes in gaining market share and sharing knowledge and expertise across the two companies. The two parent companies are at odds over how big of an issue this is, which has created the most recent conflict.

There have been problems since the beginning of this JV, including a conflict between American and Japanese management and a serious lack of communication throughout the company. Many of these issues, however, were resolved when Wilson and Morota replaced the President and General Manager of Wil-Mor in 1995. The new management team has worked well together since that time, but the lack of profits is an issue that continues to plague company leadership.

The biggest problem concerning the financial performance of the JV is that the two invested parties have had different financial expectations for the project. While one company expected the JV to be profitable within several years, the other holds a more long-term view and dismisses early financial losses as symptoms of growing its market share. Specifically, Wilson has the biggest issue with the lack of profitability. Wilson went into this JV with expectations of almost immediate returns on investment, and has not planned for this many years of losses. They don't see themselves as being able to continue losing money on this venture, and there is heavy pressure from Wilson headquarters on Wil-Mor leadership to produce profits sometime soon. As a company overall, according to Steve Easton (new Wil-Mor general manager), Wilson is generally "skeptical of making long-term investments," which explains their focus on short-term profits in this scenario.

Morota, on the other hand, is a Japanese company that views the world much more like the Japanese culture at large: over the long run. Morota's expectations going into this JV were not about immediate profits; rather, they were about building North American market share and reputation in the United States, using customer service to build supplier relationships in a new market, and attempting to export their focus on product improvement and quality standards to a new labor force. With these original expectations, it's clear that Morota sees itself as able to continue losing money on this Joint Venture because it's part of their long-term North American entrance strategy. Their larger goal is to be ready to service Toyota's (anticipated) increase in North American production volumes. In order to be in that position, they know they have to minimize their cost structure, build industry relationships and be able to work with American labor; their JV-specific goals (from above) will help them to eventually attain such status in the long-term.

These crucial differences between the JV's parent companies in terms of expectations and priorities have created a very difficult situation for Ron Berks, president of Wilson's North American Automotive Division. He is facing mounting pressure from other management at Wilson