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  Covisint - B-to-B Supplier Arrangement

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Author Topic:   Covisint - B-to-B Supplier Arrangement
Marc Smith
Cheech Wizard

Posts: 4119
From:West Chester, OH, USA

posted 16 September 2000 09:02 PM     Click Here to See the Profile for Marc Smith   Click Here to Email Marc Smith     Edit/Delete Message   Reply w/Quote

Key auto supplier agrees to join Covisint exchange


(September 15, 2000) In a move that came just three days after the U.S. Federal Trade Commission (FTC) gave an initial green light to the Covisint online exchange being developed by the Big 3 automakers, Visteon Corp. - the world's second-largest automotive supplier - yesterday announced that it plans to participate in the Internet-based purchasing venture.

Dearborn, Mich.-based Visteon, which had revenue of $19.4 billion last year, said it expects to reduce costs and increase sales by making use of Covisint's supply-chain capabilities. The business-to-business exchange also provides the potential for sharing data and collaborating on product development with other companies via the Internet, Visteon added. Additional electronic data interchange services will also become possible, it noted.

Visteon officials couldn't be reached for comment on whether the FTC's announcement that it was ending an antitrust-related investigation of Covisint had spurred the automotive supplier's decision to take part in the exchange. But Covisint spokesman Dan Jankowski confirmed that Visteon had been waiting for the FTC to take action.

Visteon wanted to get more details about the exchange, including pricing information, that Covisint couldn't provide until its plans were approved by the FTC, Jankowski said. He declined to be more specific, saying that Covisint is still not making the information in question public.

The FTC gave Covisint a tentative go-ahead after two rounds of inquiries into the plans announced earlier this year by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG. The commission voted 4-0, with one member not participating, to close the investigation for now. But the FTC said the matter could be reopened in the future because Covisint is in such an early stage of development that commission members "cannot say [the] venture will not cause competitive concerns" going forward (see story).

Covisint still faces an ongoing inquiry by the German Federal Cartel Office, known as the Bundeskartellamt, before it can begin operations. But Jankowski said Covisint officials expect to get the German agency's approval by the beginning of the fourth quarter, which is also when the exchange hopes to open for business.

With the addition of Visteon, Jankowski added, Covisint now has the 10 top global suppliers of auto parts and subsystems on board. Troy, Mich.-based Delphi Automotive Systems, a former GM unit that's now the world's largest automotive supplier, with revenue of more than $29 billion last year, signed up to take part in the Covisint exchange three months ago (see story).

Ultimately, it was a "no-brainer" for a large automotive supplier such as Visteon to join the exchange, said Kevin Prouty, an analyst at AMR Research Inc. in Boston. Prouty added that he doesn't see much significance in the fact that Visteon waited for the FTC to make its decision on Covisint.

"There is still a lot of confusion around what Covisint will be," Prouty said. And Visteon, which itself was formally spun off from Ford in April, "is still trying to separate itself" from the automaker's operations, he noted.

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