Ford Looking for Global Manufacturing Alliances
May. 10, 1985
DETROIT (AP) _ Ford Motor Co. is looking for global alliances that could allow the automaker to move a larger portion of its manufacturing abroad.
Chairman Donald Petersen told stockholders that Ford has discussed linkups with Fiat of Italy, Yamaha of Japan and a small South Korean company, while increasing business with Mazda Motor Corp. of Japan, which is 25 percent owned by Ford.
Petersen said Ford, as expected, also would export cars to the United States from a plant it is building in Mexico.
Petersen gave few details or timetables at the Ford annual meeting Thursday or at a news conference afterward.
But he made it clear that Ford, despite record profits of $2.9 billion last year, considers itself vulnerable to the rising level of cheaper, Japanese- made cars exported to the United States and the potential for new competition from South Korea.
''We are going to do everything we possibly can to see how much of this production we can keep in this country,'' Petersen said, adding, ''As far as I'm concerned, school's out. I just don't know the answer yet.''
Eight Japanese carmakers export to the United States. General Motors Corp. and Chrysler Corp. themselves import large numbers of cars from Japan and will be increasing the shipments this year. GM also plans to import South Korean- made cars later in the decade and Chrysler is looking to make parts there.
Petersen used the annual meeting to make two major technology announcements. Ford has acquired a $20 million equity and research interest in American Robot Corp. of Pittsburgh, which specializes in computer-integrated manufacturing, and will join with General Electric Co. to build electric motors in a high-technology factory at a site to be determined.
The moves were Petersen's first major statements since becoming head of the No. 2 U.S. automaker Feb. 1, replacing the retired Philip Caldwell.
Petersen said a Ford assembly plant under construction in Hermosillo, Mexico, would build 100,000 Mazda Motor Corp.-designed small cars annually for the North American market in the 1988 model year.
He repeated a previously disclosed report that Ford was working with Mazda on importing minicars from Kia, a South Korean truck manufacturer. Ford owns 25 percent of Mazda and Mazda owns part of Kia.
Ford currently builds Mazda-designed cars in Taiwan and Petersen said that connection also could be tapped in the future.
Yamaha Motor Co. Ltd. - known primarily as a motorcycle maker - will design and build a 3.0-liter high-performance engine for Ford's new line of midsize family cars, the Ford Taurus and Mercury Sable, Ford President Harold Poling said. Imports will come to 15,000 to 20,000 engines a year, Poling said, or less than 1 percent of projected Taurus-Sable production.
Ford doesn't import cars directly from Japan. However, Petersen said Ford will get a large share of the cars Mazda will make when its new plant south of Detroit opens in 1987.
The Fiat connection was less clear, with Petersen declining to say whether Ford and Fiat would build cars or parts together or enter into some other business arrangement. He told reporters only that ''informal discussions'' have been held.
Ford is Europe's No. 1 car sales company and Fiat is No. 2. But the market there is so crowded and profit margins so slim that companies are looking for ways to slash costs, including business combinations.
Petersen said he was willing to work with the United Auto Workers to keep jobs in America, but he made no promises in light of Japan's recent relaxation of voluntary import quotas on car shipments to the United States and the overseas moves by GM and Chrysler.
''It isn't entirely clear what the final response will have to be,'' Petersen said. ''It is rather clear there's going to be much more severe competition at the lower part of the market in terms of price.''
Petersen declined to say whether Ford had bid for Hughes Aircraft Co., which is being sold, with bids to be opened next Wednesday.
Ford, with more than $5 billion in cash and marketable securities on hand, and GM, with upwards of $8 billion, are considered prime contenders for Hughes. Both have expressed interest in expanding their defense contracts, which currently constitute a tiny part of their total operations.