Ford chief seeks help from Toyota

By Micheline Maynard International Herald Tribune

December 27, 2006

(Detroit) The new chief executive of Ford Motor, which is struggling to bounce back from one of the worst crises in its history, met last week in Tokyo with the chairman of Toyota Motor, which is poised to become the world's biggest auto maker next year.

Ford's chief executive, Alan Mulally, and Mark Fields, the head of Ford operations for the Americas, attended the meeting last week with Toyota's chairman, Fujio Cho, and other top Toyota executives, senior officers at both companies said Tuesday, speaking on the condition of anonymity.

Toyota issued a statement Wednesday describing the meeting as a courtesy call, but did not say what was discussed.

"We held talks at the request of Ford," the president of Toyota, Katsuaki Watanabe, said in Nagoya, according to Bloomberg News, citing Kyodo News.

Toyota and Ford officials, as well as the Japanese news media that first reported on the meeting, indicated that the talks had focused on developing environmentally friendly technology, like hybrid-electric and hydrogen fuel systems, as well as on ways that Toyota could help Ford improve its manufacturing efficiency.

The meeting of Mulally, Fields and Cho follows talks held this summer between General Motors, Renault of France and Nissan of Japan.

But Ford and Toyota are not believed to have discussed anything that resembled the joint purchasing or car- production ideas that were the subject of GM's talks with Renault and Nissan, which ended in October without any agreement.

Ford and Toyota have an association that stretches back to the 1950s, when Ford allowed managers from Toyota, which was trying to regroup after World War II, to study the operations at its giant Rouge complex in Dearborn, Michigan.

The visits helped Taichi Ohno develop the Toyota production system, which emphasizes driving out waste, fostering worker involvement and making continuous improvements on the factory floor.

Toyota also came to Ford in the 1980s when it was looking for an American partner with which to open its first plant in the United States.

The two companies held brief discussions that could have led to a joint Ford- Toyota venture to build a version of the midsize Camry for each company. Instead, Toyota entered into a joint venture with GM that recently celebrated its 20th anniversary.

Now, Toyota and Ford may work together again as Ford tries to regroup from a third-quarter loss of $5.8 billion in North America.

Cho, who worked under Ohno and ran Toyota's plant in Georgetown, Kentucky, before becoming its chief executive and subsequently its chairman, is concerned about the financial problems facing Ford, an executive at Toyota said.

"If he can do anything to help them out of this, he would like to," the executive said.

Analysts have said that Ford probably had little to offer Toyota in terms of cash or know-how, though Toyota could be seeking access to Ford's hybrid technology. Rather, they said, Toyota was probably hoping to deflect criticism from Washington as it seeks to overtake GM.

"If it forges a relationship with Ford, Toyota is probably hoping it will be seen as a goodwill move," said Chester Dawson, author of "Lexus: The Relentless Pursuit." He added, "Toyota is wary of inciting trade friction."

James Womack, co-author of "The Machine That Changed The World," which examines Japanese automakers' American plants, said, "Toyota has nothing to gain, either politically or in the market, by letting Ford fail fast."

Toyota, the world leader in hybrid- electric cars, already licenses hybrid technology to Ford, which sells a hybrid version of the Ford Escape, a small sport utility vehicle.

Ford has its own hybrid program, but it cut back on hybrid development this year when it decided to place more emphasis on developing flexible fuel vehicles that can run on gasoline and another type of fuel, like ethanol.

Ford buys parts for its hybrid vehicles from Aisin Seiki, a supplier that is partly owned by Toyota and part of its global network of parts-making companies. Ford and Aisin have had disputes over the number of parts Aisin was willing to make available for Ford vehicles.

Mulally is a student of the Toyota production system and used a form of it on assembly lines at the Boeing, where he was head of the commercial airplanes division before joining Ford in September.

Mulally and Fields flew from the United States to Japan and returned immediately afterward, people with direct knowledge of their trip said Tuesday. During an interview Friday, Mulally gave no hint that he had made the trip, which is a round-trip flight lasting about 24 hours.

The long journey reflects the value Mulally places on Ford's relationship with Toyota, according to a company officer with knowledge of his views. Only a year ago, Bill Ford Jr., then Ford's chief executive, sounded a more competitive note.

"My goal is to fight Toyota and everybody else and come out on top," Ford said during an interview with Time magazine, adding: "I'm not ceding anything to Toyota. They're an excellent company, and they're a terrific competitor, but I look forward to taking them on."

Yet another $.02 worth from a proud owner of a 1970 Mustang Mach 1 @

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Reply to
Grover C. McCoury III
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Goes to show you that our Government isnt looking out for the best interest of our country and rather the worlds opinion of us, sigh. Imagine if we impose the same tactics to Japan they do on our products.

Nick

Reply to
Nicholas Anthony

In the long run protecting our markets through tariffs etc. will do us no good. Our economic model isn't built to work this way. If we penalize imports then the domestic makers will just find a way to exploit it without improving the quality of their vehicles. Then the consumer suffers and the domestics dig themselves a deeper hole to crawl out from. Besides, Toyota is not selling their vehicles for less than Ford's or GM's counterparts. Most cases they are MORE expensive. People buy them anyway.

IMO, the main problem facing Ford and GM is the perception of the public regarding their products. I don't think their vehicles are all that worse, or any worse for that matter, than the Japanese imports. The import companies have run circles around them from a marketing aspect. After the Mustang, what does Ford have to get anyone excited about their lineup? I can't think of any right off hand.

Here's another reas> Goes to show you that our Government isnt looking out for the best interest

Reply to
Michael Johnson

Japan isn't a problem IMO. Simply make a better product, that's all that's needed.

Reply to
Brent P

One post, as I have hashed this out too many times in the past. Ford and GM are as good or better than anything Nissan, Toyota, Honda, or any of their subsidiaries produce. They are a 100 fold better than the junk Hyundai, Kia, Mazda, or Mitsubishi put out.

All one has to do is research the number and types of recalls the asians have been having for almost 2 decades vrs what Ford and GM have been issuing. Of course researching that is hard these days, since AllData and Mitchell both pulled the lists for Asian cars this year. I wonder why they did that.

Whitelightning

Reply to
Whitelightning

The only place the domestic automakers are getting their a$$ kicked is in the marketing of their products. They have good vehicles but can't seem to sell them to the public.

Reply to
Michael Johnson, PE

The seem to well in the US.. GM and Ford still outsell any import brand in the US.

mike

Reply to
Mike Hunter

Reply to
Michael Johnson, PE

Actually Ford and GM fail on a number of measures that make for a 'better' product. GM makes a lot of boring, utilitarian, FWD cars and has been doing so for many many years. Ford has the mustang, that's it. The

500... what's that? A warmed over volvo? There is more that goes into 'better' than simple reliability. GM has cheapened parts to where it feels cheap.... it might be reliable but look and feel and things like that matter when you are trying to sell a product.

I am well aware how recalls and such are handled in the media. It doesn't help ford and gm that's for sure. But when ford can put a mustang out that's good and it sells, it's obvious that this isn't crippling them, it has to be something else.

Reply to
Brent P

I disagree as there is competition from within that would improve the market. The real reason we slipped was do to OPEC and oil. American manufacturers had to come up with something more fuel efficient, smaller, and better emissions. I dont recall hearing complaints of American cars in the 60's or early 70's. It was only until we were forced to do something we were not familiar with and had to adapt to something the Japanese and many European makers already had been doing.

I agree they need to improve their image or if they try to re-invent it do it in a way that you dont lose your base customers by what you are touching on next paragraph.

Amen! How can you expect loyalty if you keep changing your identity? The Ford Taurus had an awesome reputation and was a top seller. Why get rid of the nameplate when it is doing well? Also if you are going to bring a 4 door car based on the Mustang do us all a favor use it under a Mercury name so they can get some recognition. Perhaps bring back a name like the Cougar that everyone loved. Great alternative if people are sick of seeing so many Mustangs or if they expect a family and need more room.

Nick

Reply to
Nicholas Anthony

Then why did Toyota out sell Ford? How come they have their sights on beating GM here very soon too?

Nick

Reply to
Nicholas Anthony

Much of what he complains about doesn't go away with higher trim levels. Look at the mustang just from '94 to '99. How much was decontented away? Leather rear seat, underhood light, etc etc. I am still waiting for some '94s to hit the local self serve yards so I can start pulling off things that were decontented by '97.

And the utilitarian feel of cars like taurus? That doesn't go away at all.

Reply to
Brent P

Once ford cuts away the fat brought about by decades of union demands and managment excess, they will be back on track.Never be 1st but at least a viable competitor. I'm sure its gonna hurt a lot of people before it gets better. The auto industry is NOW no different than any other job that pays you on performance. Make good stuff at a good price and they will come. I know easier said than done!

Reply to
dave

The problem is that the domestics aren't making cars that the public wants in their driveways. If the Japanese can make desirable cars then why can't Ford and GM? Protecting their markets will not force them to make better cars. In fact, it will have the opposite effect. There won't be any pressure on them to make better vehicles.

Detroit had no real competition in the 50s, 60s and 70s so how would any of us know to complain? We had only one point of reference... theirs. Now we have a choice and many of us are choosing the imports.

Ford and GM need to concentrate on making good vehicles. Ford has spent too much money buying other brands (Volvo, Aston-Martin, Jaguar etc.) and not nearly enough on vehicle development within the Ford/Lincoln/Mercury moniker. Their are now buying hybrid technology from Toyota! They should be developing their own technology and selling to others.

Reply to
Michael Johnson, PE

They may sell well, but not at a profit. Ford and GM are supposed to be for-profit companies. At the moment, they aren't.

Jeff

Reply to
Jeff

Because they sell terrific cars (just like GM and Ford). But, unlike GM and Ford, they sell them at a profit. Plus, they are able to sell many fuel-efficient cars, because they have so much more experience building and selling them than Ford and GM. And at a profit, too.

Jeff

Reply to
Jeff

Unfortunately, the only way to get out from under "all that baggage" that they have been dragging around will be to declare bankruptcy - which will have devastating and long term effects on the US economy.

You could head this off by having ALL the US based automakers (at once), their investors and bondholders, their subcontractors and suppliers, and the Unions representing all their labor forces renegotiate their contracts and agreements now, while the companies are still viable.

One of the stipulations would have to be that all the pension and benefit liabilities have to be caught up on and the trust funds made whole NOW, even if that lowers the wage rate some more.

Unfortunately, you aren't going to get them all to agree to this - the unions still have the attitude "We won these rights through collective bargaining, and we are going to keep them!"

Last I checked, keeping 100% of nothing still isn't a good deal. Berating a dead horse helps nobody - first you have to stop the beatings and nurse it back to health, then we talk again.

The bankruptcy wipes out all the investor equity, except for the few privileged people that can use dodges like preferred stock or the few secured things the BK court can't touch. Ford stock was once considered one of the solid "Widows and Orphans" investments that would never go away - not anymore... Any suppliers owed large sums by Ford will be hurt, some could be put under.

All the current employees and retirees will be hurt, badly. They can annul all the contracts, and use the leverage of "Sign the contract we put in front of you, or we don't open back up at all." This guarantees a workforce that really doesn't care whether the company survives or not...

The health insurance and other benefits will go away or be severely restricted, and the pension plans will go under and the (deliberately long under-funded) pension liabilities will be dumped on the US Pension Benefit Guaranty Fund - paid out of the General Fund which will hurt the US Economy.

And when the PBGF takes over the plans, the retiree benefit payout's drop a LOT compared to what was originally negotiated.

And there is a large lag time to consider - it can be several years between when they start actually delivering quality products at a good price that are also easy and inexpensive to repair and maintain over the long haul, and when you can convince the public that it has really happened, and that they won't backslide.

When you can change simple things simply - like swap the heater core in any Ford vehicle inside of two hours, or get to all the sparkplugs without disconnecting the motor mounts and lifting the engine partially out of the car or cutting a hole in the firewall (among other bonehead stunts they've pulled over the decades) - then I'll believe that they've fixed the engineering.

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Reply to
Bruce L. Bergman

GM sell more cars than any import brand, they just do not have the same name on the grill.

mike

Reply to
Mike Hunter

You obviously do not understand the automobile business. Economies of scale, they ARE indeed making a big profit on their cars and trucks. The corporation is not making a profit however because of lower higher profit truck sales, plant restructuring and reductions as well as force reduction costs.

GM and Ford are spending billions if OR&DO, as well, for the many new models coming to market over the next three years. If one closely reads many of the various current owners surveys, rather than what is in the media, GM and Ford are arguably building BETTER cars and certainly better trucks than any of the imports. Even import buyers who the believe import cars are better, say the trucks from GM and Ford are better than what they find at the import stores.. How is that for a perception, when many of the engines and trannys in the GM and Ford cars are the same as in their trucks, albeit configured for more torque. Torque by the way is something the Japs give up in spades to get more horse power out of their underpowered engines

mike

Reply to
Mike Hunter

Reply to
Tony Alonso

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