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Monday, Aug. 18, 1997

Ford and Mazda moving in sync


Staff writer

DEARBORN, Mich. -- A designer at Ford Motor Co. can send ideas and data electronically to designers at other Ford facilities all over the world. In a similar manner, exchange of design and information has recently begun with Ford's Japanese partner, Mazda Motor Co., according to an official at Ford's design center at company headquarters.

"The relationship with Mazda is good at a design level. We have a common program, and we have designers from Mazda here to work together," says Claude Lobo, director of design at Ford's small and medium vehicle center in the U.S.

The two companies currently have separate computerized development systems, but they reportedly plan to connect the two systems to be able to develop cars jointly in the near future.

This is only one example of a dozen projects Ford is pursuing with Mazda. Since Ford increased its stake in Mazda to 33.4 percent and sent a number of Ford executives to the company, including Henry Wallace as Mazda president last year, the two carmakers have gradually stepped up their relationship.

Many observers say Ford is trying to establish a stronger foothold in Asia and other parts of the world using Mazda resources.

In 1994, Ford President and CEO Alex Trotman unveiled the Ford 2000 plan, which aims to consolidate the production process, product development and global distribution. Since then, the No. 2 U.S. automaker has been engaged in implementing cost-cutting through restructuring and reorganization.

For example, Ford's global auto and auto parts facilities formerly operated as separate entities, but under Ford 2000, they have been combined. In addition, five design and development centers have been consolidated into three -- one for small and midsize passenger cars, one for large cars and one for trucks.

It also plans to reduce the number of platforms from 32 to 16 in the near future and reduce development costs.

Although Ford executives say Mazda was not originally included in Ford 2000, they admit that Mazda forms part of the company's global strategy.

In a symbolic move, Ford and Mazda have already agreed to synchronize product cycles and share a number of platforms, including engines and transmissions.

"We have a high level of cooperation between the two companies," Trotman said. "In manufacturing, product technology and in sharing of the products, we have cooperative understanding of how we will work over the next five years or so."

Ford has only a handful of its own production bases in Asia, and a partnership with Mazda will enable the company to take advantage of Asian business opportunities.

Currently under way is a joint venture aimed at Asian markets in Rayong Province, Thailand, to manufacture pickup trucks. It is scheduled to start in 1998.

Executives of the two companies have also expressed a strong interest in establishing a company to jointly develop cars in the Philippines.

In Japan, at Mazda's Hofu Plant in Yamaguchi Prefecture, production of Ford-designed vehicles is under consideration, according to Ford Vice Chairman Wayne Booker. The plant, which was built during the asset-inflated bubble economy, has been operating under 50 percent of capacity, and Mazda has long been aiming to increase productivity.

However, uncertainties still remain over business prospects for both companies and the future of the partnership. Mazda still needs to improve its financial condition while Ford must work on penetrating the Japanese market.

Ford initially hoped Mazda would be the stepping stone for entry into the Japanese market, but it has not been successful so far. If Mazda's business recovery remains slow, it is still possible Ford will move away from Mazda.

"I have been very disappointed with the slow pace of our growth in the Japanese market," Trotman said.

Sales of Ford brand cars posted a steep decline in 1996. In the same year, Ford's overall sales in Japan fell 7 percent to 45,600 units.

Some observers also point out that in some cases, the close relationship with Ford may negatively affect Mazda's business.

One example of this is an experimental Ford project to build megadealerships in Indianapolis. Ford currently plans to buy 19 of the independent Ford and Lincoln-Mercury dealerships in Indiana and replace them with four or five megadealers, which would operate under an organization owned by Ford.

The megadealers will also offer used car sales and services, and they are reportedly thinking about selling Mazda brand cars as well as cars from Jaguar Ltd., a 100-percent subsidiary of Ford.

A similar plan is also under way in Salt Lake City, and Ford executives say the aim is to provide customers with greater choices.

However, an executive of U.S. based Honda Motor Co. has said that if Mazda is included in the megastore lineup, Mazda cars will be pushed aside by Ford's large vehicles, currently selling well on the U.S. market, and Mazda sales would probably not increase.

Said Deep, managing editor for Word's Automotive Reports, a Michigan-based weekly magazine, agrees.

"Mazda has a good brand image in Asia, and Ford certainly needs this. But not in the U.S.," he said. Since Mazda is suffering from sluggish sales in the U.S., what it needs to do is establish its own brand image and sell its cars separately rather than under Ford's umbrella, he said.

"I don't think that Ford will let Mazda die because it has invested so much," Deep said. But he also added that unless Ford can utilize its Mazda links, Mazda's resources and business prospects will be hurt.

Henry Wallace has also said that a lot of work needs to be done to coordinate ties with Ford.

To him the issue is not a mechanical or designing dilemma but has more to do with establishing a line of communication.



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