Japan-US Business Report LogoJapan-U.S. Business Report

No. 348, September 1998

Issue Index

Japanese Companies in the US


TRANSPORTATION EQUIPMENT

With Japan's car and truck market in a prolonged, deep slump, the Big Three U.S. automotive manufacturers are being forced to reconsider their sales and marketing strategies. FORD MOTOR CO. is perhaps further along in this process than its rivals. According to current plans, FORD MOTOR CO. (JAPAN) LTD. will spend something on the order of $140 million over the next two to three years to downsize and revamp its dealer network. The company has 289 sales outlets around the country selling imported products. A significant number of these dealerships sell only one or two Ford vehicles a month and consequently are losing money. Ford hopes to buy out the contracts of these operations or merge them with other outlets so that the remaining dealerships will have the volume of sales to make money by encouraging salesmen to push the Ford product rather than cars and trucks made by another manufacturer that also are sold under the same roof. While consolidating its current sales network, Ford has not ruled out signing up new dealerships that can sell several hundred vehicles a year.

The Visteon Automotive Systems unit of FORD MOTOR CO., the number-two U.S. car and truck maker's big internal and OEM parts production group, hopes to generate more business from Japan's automotive industry by opening a technical center in Toyota City, Aichi prefecture, the home of TOYOTA MOTOR CORP. The facility will be staffed by 20 engineers and other personnel.

GOODYEAR TIRE & RUBBER CO. plans to give BRIDGESTONE CORP. a run for its money in the local market for radial tires for heavy-duty equipment. For starters, the top American tire producer will take operational control of NIPPON GIANT TIRE CO., LTD. by increasing its stake in this Tatsuno, Hyogo prefecture manufacturer of heavy-duty tires to 65 percent. Nippon Giant Tire was formed in 1971 by Goodyear (50 percent), TOYO TIRE & RUBBER CO., LTD. (30 percent) and MITSUBISHI CORP. (20 percent). Goodyear will buy most of the trader's interest. Equally important, Goodyear and Toyo Tire & Rubber will spend $61.4 million to double capacity at Nippon Giant Tire to 2,200 tons a month within three years. The American partner will market 65 percent of this output.

The bankruptcy filing of OKURA & CO., LTD. has upended marketing arrangements in Japan for GULFSTREAM AEROSPACE CORP. and other American manufacturers of corporate jets and aircraft engines and electronics that had exclusive distribution deals with the trader. However, MARUBENI CORP. has reached a tentative agreement with the Okura bankruptcy administrator to buy that company's aerospace division. If the agreement is finalized, Marubeni will open negotiations with affected U.S. companies about representing them.

More than a year after it acquired MCDONNELL DOUGLAS CORP.'s operations, BOEING CO. will merge that company's Tokyo subsidiary into its own in October. The aircraft giant also plans before the end of the year to create two new groups within its subsidiary responsible for satellite launch services and satellite-based multimedia services — businesses that assumed greater importance at Boeing with the MDD purchase.

An exchange rate of ¥145=$1.00 was used in this report.
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