JCI is Peerless in Forming Partnerships

Johnson Controls Inc. sees peer partnering with other suppliers as a means of competing with the world's leading systems integrators, without the debt load that pursuit by acquisition brings with it.

The premise is as simple as neighbors chipping in to share the cost of a fence, for their mutual benefit.

And it follows the logic that if someone else can supply higher quality fence posts at a better cost, why try to produce them yourself.

Past practice was to develop every part of a system in-house, which put huge dents in cash flow. "We recognized it was only worth doing it yourself if you are better at it. Otherwise it is not worth investing the capital," says Michael J. Suman, JCI group vice president, advance sales, marketing and business development worldwide.

That is not to say JCI won't acquire where it makes business sense to do so, he says. Mr. Suman, himself, came from Prince Corp. four years ago when it was acquired by JCI.

It is expensive to acquire electronics today, and unnecessary if a partnership accomplishes the same goal. JCI has nine peer partners in electronics alone. It made sense, for example, to tap into Yazaki Corp.'s expertise in 42-volt systems, in developing a system to supply power for sport/utility vehicles. The system is generic in its connector so it can work on the SUV body architecture of any OEM. The carmakers benefit as well because the customer doesn't care that the componentry is shared, and it reduces the cost for all.