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Automotive Industry

Wingcast implosion casts aspersions on Ford - Opinion & Analysis - Column

Automotive Industries, Oct, 2002 by Paul Hansen

Within minutes of arriving at work on Monday morning, June 3, 2002, some 200 employees of Wingcast learned they had lost their jobs and that Wingcast was dead.

By now the automotive electronics industry is well aware that Ford shut down Wingcast, its 85/15 percent telematics joint venture with Qualcomm, but many may be unaware of Ford's and Qualcomm's questionable behavior in the months leading up to the closure and since.

Founded in July 2000, San Diego, Calif.-based Wingcast has accumulated 200 commercial creditors -- from small family-owned businesses, engineering companies and contract workers to huge global corporations -- and so far, Ford and Qual-comm have refused to make good on Wingcast debts. Because Wingcast was a corporation, the owners are protected from creditors. In fact, Qualcomm is included on the list of creditors.

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So is Verizon, which signed multi-year contracts with Wingcast to be its wireless communications provider and lost hundreds of millions of dollars worth of future business. Also on the list of creditors is top-tier parts-maker Denso, slated to provide millions of units of telematics hardware for installation in Wingcast-equipped Ford and Infiniti vehicles. Back in January 2002, following rumors that Wing-cast was in trouble, Denso checked with Wingcast and Ford to verify that Wingcast was still going forward with the production order. Denso then received Ford's assurances that Wingcast would continue along as planned, so Denso continued investing to get production up and running. Denso hired and trained a lot of people and readied two factories in California. After Wingcast folded, Denso had to cut 177 jobs at Denso Wireless Systems America in Vista, and at LA Laboratories in Carlsbad.

While Nissan isn't listed as a creditor, the carmaker was badly hurt when it learned too late that Wing-cast had gone down. Nissan was going to make Wingcast a standard feature on four Infiniti models beginning in 2003. Before announcing its new Infiniti Communicator product at the 2002 New York Auto Show last spring, Nissan checked in with Ford to see if everything was a go. Ford assured Nissan that Wingcast was fine, but just seven weeks later, Wingcast folded and Nissan was forced to cancel its telematics feature on the Infiniti. Nissan is still looking for a telematics service provider to replace Wingcast.

Wingcast's 200 commercial creditors will not get paid until Wingcast's assets are cashed out through liquidation and sale of intellectual properly, and all creditor claims are properly valued. As of June 2, 2003, according to Development Specialists Inc., the firm responsible for paying off Wingcast creditors, as much as $8 million could be available following the sale of assets. Since the final accounting may depend on the resolution of a number of lawsuits, creditors might have to wait two or three years to get paid. And worse, they likely will be paid somewhere between five and thirty cents on the dollar.

While Ford could be legally correct in the way it is shuttering Wingcast, its behavior -- misleading partners, employees and suppliers, as well as stiffing creditors big and small -- does not bode well for Ford, which has already lost a lot of credibility and respect in the industry. In the future, companies will be wary of Ford dealings, and will want to get paid before work is done or get agreements beforehand that protect them.

Automotive Industry

Wingcast implosion casts aspersions on Ford - Opinion & Analysis - Column

Automotive Industries, Oct, 2002 by Paul Hansen

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