Number two auto manufacturer Ford Motor Company (NYSE: F) announced Thursday that it will partner with B2B auction site ZoneTrader.com to sell its surplus capital equipment at online auctions.
Under the terms of the agreement, ZoneTrader.com will be responsible for managing the disposition of all Ford equipment that is not covered under a service agreement with the original manufacturers.
In addition to selling such items as machine tooling equipment and office furniture, ZoneTrader.com will be responsible for testing and refurbishing items as needed, managing billing and credit issues, and disposing of obsolete or unusable items.
Taking Advantage of a Growing B2B Market
The move allows Ford to take advantage of the growing B2B e-commerce market and the industry trend toward e-marketplaces. A recent report by Forrester Research, Inc. predicts that the B2B e-commerce market will reach $2.7 trillion (US$) by 2004. In addition, the report predicts that 53 percent of this trade will take place through e-marketplaces, which include auctions, aggregators, bid systems, and exchanges.
“U.S. businesses are universally preparing to buy and sell online, leveraging the Net to build deeper relationships with their business partners,” said Steven J. Kafka, eBusiness Trade Research analyst at Forrester. “But the rampant growth of online trade through these one-to-one business connections will taper off after 2001, as firms more actively participate in e-marketplaces to connect with a wider universe of buyers and sellers.”
Ford sees the deal as an opportunity to reach a previously untapped market for its surplus equipment. “For the first time, our used assets will be available to both the automotive and non-automotive markets. One of our biggest challenges is to improve asset utilization and recovery. Today’s announcement brings the full power and speed of the Internet to that challenge,” said Ford Motor Company group Vice President, Global Purchasing and South America, Carlos Mazzorin.
“It’s essential that we efficiently dispose of our excess equipment,” added Ford Vice President Brian Kelley.
Ford Gets Busy
Ford booked a record profit of $7.9 billion in 1999 and has accelerated its Internet efforts in recent months. It recently signed marketing deals with Yahoo! and Microsoft’s CarPoint and joined rivals General Motors and DaimlerChrysler in announcing the formation of a B2B marketplace for automotive purchasing.
Inside the Deal
Under the terms of the deal, ZoneTrader.com will initially provide asset disposition services for Ford’s Cleveland (Ohio) Engine Plant No. 1. Once the Cleveland project is successfully completed, Ford and ZoneTrader.com plan to expand the relationship to other Ford plants in the United States.
In addition, Ford will employ the ZoneTrader.com Strategic Warehouse Advisory Team (SWAT) service to help develop processes for tracking and storing surplus assets within its own sites while they await sale at auction.
In a separate agreement, The Minneapolis, Minnesota-based ZoneTrader.com announced that it received $48 million from Trident Capital, Technology Crossover Ventures and Ford in a second-round capital placement. The company has now raised $64.5 million since its launch in October 1999.