On Nov. 17, Mazda Motor Corp. President Mark Fields unveiled a restructuring plan aimed at Mazda's main problems: high costs at home and exposure to the strong yen because of too much reliance on exports.
The plan calls for cutting costs 15 percent; closing the Ujina No. 2 plant in Hiroshima to eliminate excess capacity in Japan; building 100,000 cars a year in a Ford of Europe plant to reduce Mazda's exposure to currency swings; and trimming 1,800 white-collar jobs by March 31.
In addition, the plan lays out Mazda's role within the Ford group. Ford owns a controlling 33.4 percent of Mazda. The Japanese carmaker will be the lead engineer, or 'center of excellence,' for large four-cylinder engines and for mid-sized (C/D) cars. It remains to be seen how that will play out, however. One question: Will other branches within the wider Ford family, such as Volvo and Ford of Europe, defer to Mazda on engineering questions, even though Mazda traditionally has lower development costs?
Fields met with Asia Editor James B. Treece on Nov. 22 to discuss the restructuring plan and Mazda's future.
Ford's empire has expanded to include Volvo and Land Rover. How has that affected Mazda?
We're happy to be part of the Ford group. Ford has three main strengths. One, they have strong brands. Second, they have a very diverse management group. Third, they do a very good job of integrating brands and maintaining brand integrity.
Clearly a year and a half ago, when Volvo was acquired, all of a sudden there was a giant sucking sound. That was the attention going from Mazda to something else.
But that's where our strategy of engaging Ford on a more proactive basis has worked, because it has kept us at the forefront with the rest of the brands. Within the Ford family, we've put together a communication process even at the middle and lower levels to continue the engagement.
Can you cite an example?
Purchasing. For our next-generation C car, our purchasing senior managers here at Mazda have a biweekly videoconference with their counterparts at Ford, Volvo, etc., to hash out the issues.
Is it difficult getting attention? These days, no, because we've worked very hard at making sure that we justify the attention and that we proactively engage. I think if we let it be and had not done that, sure, it would have been a case of a lot of things on the plate and some things fall off.
You are now competing for Ford's attention and management resources with several other non-Ford brands. For example, it would be natural to put the best marketing person at the brand that has the highest margins.
You shouldn't just look at it as a one-way street of Ford guys coming to Mazda. Mazda has a lot of strengths it brings to the Ford group, in manufacturing, manufacturing engineering, r&d, particularly investment efficiencies. We actually now have a person over as a manager within Ford in the powertrain manufacturing area. So you're starting to see things go two ways.
Richard Beattie's departure as CEO of Mazda North American Operations had to hurt.
Richard did a lot for the business. It will be a natural progression when people go back to Ford (from Mazda). That's just a fact of life.
I view that as a positive. The more people we have who are knowledgeable in the Mazda business, the more they'll be able to adequately represent the Mazda viewpoint back on the 11th and 12th floor in Dearborn. Richard is now the VP of investor relations. He can speak very intelligently when asked by the investment community, 'What about Mazda? Where does Mazda fit? What are their strengths and weaknesses?'
And (new CEO) Charlie Hughes, who built up the Land Rover business, is going to be a big addition. He also is a very excellent marketer.
It's not a case where the bench is only so long, where Ford has so many brands that it's starting to run out of talent. If Ford goes out and decides to purchase four more brands that need a lot of work, then I might start getting concerned.
In I4 engines, will Mazda be an engineering center primarily, or will you be exporting those engines to North America as well?
We will lead in the engineering and development of those engines. From the manufacturing standpoint, the I4 program will encompass upwards of 2 million units in the Ford universe. There will be four facilities that will actually produce the engine. We'll have one in Hiroshima, which will produce upwards of 400,000 to 425,000 once the plant gets up and running toward the end of next year. Then there are Ford facilities around the world. I believe there's one in Chihuahua, Mexico, one somewhere in Europe and one somewhere else.
Mazda will be the center of excellence for mid-market cars. Define that.
We say front-wheel drive, mid-sized vehicles. You're looking at about the C/D segment. But with stretching and shortening, even that's blurring over time.
Will Mazda be the lead engineer on the next Taurus?
Actually, that's a bigger vehicle. That's a D car.
You say C/D. Is it between C and D, or is it C and D?
Well, it's still evolving. But I can term it this way. The first application of this is our next 626/Capella, and we will be working with Ford and the rest of the brands to determine their appropriate participation as time goes on. It's not fully matured just yet, but will be over the coming months.
Ford has tried several so-called world cars, and there's a real tradition of people dropping out. Either North America or Europe says, 'We have to tweak ours, so we might as well do our own.'
When we say 'Centers of Excellence,' we really mean centers of responsibility.
When we look at architectures or platforms, or whatever you want to call them, before, the approach was let's try to commonize platforms, sheet metal, screws, everything. And there was a lot of to-and-froing, what's right for this market vs. that market.
Our approach now is, you commonize the platform, but then you put the body on that, you put the engine, etc., on the vehicle. We view those things as 'top hat' things. The commonized architecture gives us the freedom to define what that top hat should be. You get the commonality going through the body shop, but then you have enough freedom on the vehicle to make it distinctive. And you don't get into the tit-for-tat discussions so that you end up with products that are almost the same and mediocre at the same time.
You said you expect the middle of the market to disappear as the market splits between near-premium to premium cars at one end and economy models at the other. If you're talking mid-sized cars, are you getting the middle of the market? Are you getting the orphan?
I look at it as setting the Mazda strategy first, and then, within that, how does it fit within the Ford family of brands. Our strategy is not an orphan strategy. We want to become a Japanese manufacturer and marketer of aspirational vehicles at a reasonable value.
To slug it out in the middle of the market with the discounts, etc., is not a future that Mazda embraces. We don't have the economies of scale to play in that realm, nor to play in the very value realm.
Well, who's left down at the low end? If you have a stable of brands, you can't walk away from that segment.
You'll have to ask Ford that question.