Wil-Mor Technologies: Is There A Crisis?

November 2, 2010

Executive Summary After nearly four years since its founding, Wil-Mor, the joint venture (JV) between American-owned parts manufacturer, Wilson, and Japanese-owned manufacturer, Morota – is fast approaching a crossroads. The JV was formed in 1993 to support the “transplant” model of assembling Japanese-designed cars in the United States. From an American business mindset, Japanese automakers like Toyota, Honda, and Nissan had a fiercely, almost irrational, loyalty to their suppliers. This loyalty, coupled with the growing market share of Japanese cars and increased domestic supplier competition, made the Wil-Mor JV a natural outgrowth for longstanding licensing partners Wilson and Morota. However, Wil-Mor’s first 18 months was fraught with unexpected setbacks. Neither parent company anticipated the leadership characteristics required to harmonize cultural differences and Wil-Mor’s initial leadership proved so divisive that it had to be removed after a year into operations. Start-up times and costs were much higher than Wilson – and the Wil-Mor pro-forma – predicted. While Japanese quality standards were known to be high, the costs associated with quality (i.e. reduced production output) was also greater than Wil-Mor predicted. And, until recently, Wilson was unaware that the two parent companies had very different definitions of Wil-Mor “success:” Morota’s main aim was to ensure their key buyer, Toyota, was successful in its U.S. endeavors and that U.S. manufactured parts met the automakers high quality standards; Wilson was pursuing ‘low hanging’ profit ‘fruit’ and expected Japanese transplant markets to be an easy avenue to quickly grow business. In early 1997, Morota expressed great satisfaction with the partnership. Quality of Wil-Mor parts exceeded requirements for Toyota and