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No. 363, December 1999

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American Companies in Japan


The most visible sign to date of the much-touted design and development collaboration between FORD MOTOR CO. and its MAZDA MOTOR CORP. affiliate is a 1.5-liter to 2.0-liter in-line engine family for 2001-model-year and beyond small Ford cars and light trucks. The new engine family, which Ford says delivers a "spirited" performance, features lightweight construction, state-of-the-art technological versatility and a flexible fuel capability. The world's number-two automotive maker estimates that by 2004, global annual production of these engines could total 2 million units, or roughly one-fourth of Ford's yearly engine output. The family will be built at Ford's engine plants in Dearborn, Michigan, Chihuahua, Mexico and Valencia, Spain. Mazda also will manufacture the engine series at an annual rate of approximately 425,000 units starting in the fall of 2001. A new production line will be installed at one of its Hiroshima plants for this purpose.

In advance of the expected early 2001 introduction of SATURN CORP.'s midsize L-Series sedans and wagons in Japan (see Japan-U.S. Business Report No. 362, November 1999, p. 36), the company's subsidiary signed its first marketing agreement covering northern Honshu. TOHOKU MITSUBISHI AUTOMOBILE SALES CO., LTD. will open a Saturn-exclusive dealership in Sendai, Miyagi prefecture, its headquarters, sometime in 2000. Previously, Saturn had enlisted 17 dealer organizations that sell its products at 22 Saturn-only stores.

By 2004, TEXTRON AUTOMOTIVE CO., a major manufacturer of instrument panels, plastic fuel tanks, plastic interior and exterior trim products, and functional components, hopes to be doing more than $300 million worth of business with Japanese automotive makers. In 1998, the Troy, Michigan firm's sales to Japan-headquartered vehicle builders totaled only about $120 million, and most of this volume came from their North American and European operations. To help it reach its target, Textron Automotive opened a sales and engineering service facility in Yokohama that will be staffed by 12 people. In-country design-in capabilities and engineering support, the parts supplier believes, will give it a better chance of winning contracts — if not for cars and trucks built in Japan, then for products manufactured overseas.

GENERAL ELECTRIC CO., the world's top maker of aircraft engines, is in talks with ALL NIPPON AIRWAYS CO., LTD. and fellow aircraft engine builder ISHIKAWAJIMA- HARIMA HEAVY INDUSTRIES CO., LTD. about forming a company in Japan to service plane engines. Handling maintenance of the 400-plus GE engines installed on the planes flown by ANA and its offshoots would give the prospective partners a ready-made source of business. This work currently is done in-house by ANA, but Japan's number-two carrier envisions the proposed joint venture, in which GE reportedly would have a majority interest, as a way to cut costs. Moreover, the three companies see opportunities for servicing engines for Japan's upstart airlines and for East Asian carriers that do not have their own maintenance facilities in the country. A final decision on a tie-up is expected before spring 2000.

An exchange rate of ¥105=$1.00 was used in this report.aaaaaa

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