What is in this article?:
- Mazda President Guides Auto Maker to Profitable Independence
- Mazda Introduces SkyActiv
- Mazda Builds Production Base Outside Japan
- Partnership With Ford on Diverging Path
Given its recent history, it’s almost unimaginable thatfinds itself on track to report a ¥45 billion profit for the fiscal year ended March 31 and, if analysts are correct, set to double earnings for fiscal 2013 and possibly triple them in 2014.
Russian President Vladimir Putin (left), Takashi Yamanouchi celebrate start of car assembly at new 50-50 Mazda Sollers JV plant in Vladivosok last September.
Partnership With Ford on Diverging Path
Even in Asia, the two auto makers appear to be going in different directions. Last November, they separated their Chinese JV, ChanganAutomobile, into Changan Mazda Automobile and Changan Ford Automobil.
Although Yamanouchi says no decisions have been made regarding future products at the partners’ AutoAlliance (Thailand) facility, it is unlikely the relationship will continue as currently structured.
“It’s not impossible (that we will produce the same models),” he says, “but whether we’ll do it is another matter., for instance, might build a second plant in the area.” At present, the auto makers manufacture the Mazda2, Mazda3 and Ford Fiesta at their joint plant south of Bangkok.
“Moving forward, however, it won’t be easy to collaborate on platforms as we did in the past,” says Yamanouchi. “In powertrains as well, Ford is going a different direction with small, turbocharged engines, so possible areas of collaboration are shrinking.”
That said, the two auto makers have committed TB10.8 billion ($369 million) to continuing joint production of their Ford Ranger andBT-50 pickup trucks in Thailand, and last April anted up an additional TB837 million ($29 million) last April to expand capacity on the line to nearly 200,000 units.
Ironically, the parting of the ways began when Ford managers in Japan helped Mazda create its “Zoom-Zoom” brand concept in the late 1990s. Yamanouchi had a ringside seat, having been appointed director of corporate planning two months after Ford took management control and installed Henry Wallace as Mazda president in spring 1996.
At the time, Mazda, the largest employer in the city of Hiroshima, was on the verge of bankruptcy, running up ¥69.5 billion ($704 million at today’s exchange rate) in operating losses over the three previous years while its debt-to-equity ratio rose to a dangerous 200%.
Before the hemorrhaging stopped, losses would grow to ¥126.4 billion ($1.3 billion) while Mazda reported seven consecutive years of negative cash flow. Domestic production and sales plunged 50%.
Yamanouchi’s legacy will be that he took the best from the Ford years – cash-flow management, the importance of brand- and market-driven product development and, perhaps, most importantly, living within its means – and assimilated that with Mazda’s product plan, nimble operations and engineering tradition.
“We were like a frog in a well,” Yamanouchi recalls. “We also learned what our position in the global industry should be,” which is, don’t try to be everything to everybody, and big isn’t necessarily better.
If Mazda delivers on its midterm business plan, it will have a 2% share of global vehicle demand with a 6% operating profit margin and be far less exposed to the currency markets.
“Four years ago, we effectively became an independent company again,” Yamanouchi says. “Since then, we’ve tried to find a path for survival. In the past, we depended on Ford whenever a serious problem arose. My goal was to enhance our brand and, through our SkyActiv technologies, narrow our target market to those for whom ‘Zoom-Zoom’ resonates.
“The Lehman shock and fallout from the yen’s appreciation forced us to place greater emphasis on emerging markets and reform our cost structure. We can’t control everything – natural disasters, political upheaval, exchange-rate fluctuations – but we can restructure to minimize potential damage. We’re still not there.”
If Yamanouchi does get there, that will be quite a legacy.