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Auto-industry B2B exchange completes legal incorporation

December 11, 2000 12:00 PM ET

Computerworld - Ten months after it was formed, the business-to-business exchange set up by the Big Three automakers today said it has become legally incorporated -- a move that clears the way for the online marketplace to name a permanent CEO, hire its own staff and start charging for its supply-chain services.
The exchange founded by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG is now formally known as Covisint LLC. With the incorporation under Delaware laws, Southfield, Mich.-based Covisint becomes an official joint venture with its current owners including the Big Three plus Nissan Motor Co., Renault SA and software vendors Commerce One Inc. and Oracle Corp.
In a landmark deal, GM, Ford and DaimlerChrysler last February scrapped plans to build competing B2B marketplaces and decided to team up with Commerce One and Oracle to develop a single exchange. Covisint got the go-ahead to open for business in September after receiving antitrust clearances from the U.S. Federal Trade Commission (FTC) and the German government (see story).
But the FTC barred Covisint from legally incorporating during the seven-month period during which the agency investigated the exchange's business and technology plans. And after the FTC's inquiry was closed, completing the incorporation process took another two months -- a delay that a Covisint spokesman today attributed to the legal complexities of creating an organization with seven founding member companies.
Covisint currently has 350 employees on loan from the automakers as well as Commerce One and Oracle, which are jointly supplying the software that fuels the exchange. Now that the company has incorporated, many of those temporary employees will be given the option of working for Covisint on a permanent basis.
Take Susan DeSandre, a former vice president at the Auto-xchange venture that Dearborn, Mich.-based Ford initially was developing on its own with help from Oracle. She's currently on loan from Ford to Covisint, where she's working as vice president of operations. DeSandre last week said she would have the chance to become a full-time Covisint employee after the exchange was incorporated, although she added that she hadn't decided if she would do so.
"We would have liked to incorporate and get these people to be Covisint employees long ago," said Harold Kutner, group vice president of worldwide purchasing at Detroit-based GM, in a recent interview. "But the FTC would not let us bring any employees in and label them Covisint employees. When we went through this seven-month [investigation], there were very strict rules as to what we could and could not do."
Kutner



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