Ford Motor Buys 11% of Ceradyne for $10 Million

Chasing after a new technology that could give it an edge over other domestic car makers, Ford Motor Co. said Tuesday it has purchased an 11% interest in Costa Mesa-based Ceradyne Inc. for $10 million.

Ceradyne, a high-technology ceramics maker, hopes to be producing ceramic automobile engines within five years, said Richard Navert, the company’s chief financial officer.

Ford, like all car makers, is anxious to make its cars lighter and more fuel efficient. Auto industry experts say that ceramic engines may be best qualified to achieve both of those goals. Ceramic engines can operate at much higher temperatures than metal engines and do not require radiators.

Under its buy-in agreement with Ceradyne, Ford will transfer its ceramic technology to a newly created company, Ceradyne Advanced Products Inc., in which Ford will have an 80% interest. One auto industry consultant said the deal could be a prelude to Ford’s eventual acquisition of Ceradyne. “This is done all the time,” said J. David Power, president of J.D. Power & Associates, a Westlake Village auto consulting firm. “Auto makers like to have a finger in the pie. If Ford likes what they see, they’ll try to buy it.”

But Navert said the matter was never discussed and “is not even on the horizon.” The company’s president, Joel Moskowitz, was in Dearborn, Mich., with Ford officials late Tuesday and was unavailable for comment.

Currently, the Japanese--helped by government subsidies--have the leading edge on ceramic technologies, said consultant Power.

Ceradyne moved from Irvine to Costa Mesa two weeks ago. Despite Ford’s new minority interest, the 17-year-old company, which employs about 260 workers, does not expect to see any near-term jumps in employment. Some Ford technical researchers, however, will relocate to Ceradyne’s Costa Mesa facility, Navert said.