Nonprofit, nonpartisan journalism. Supported by readers.


Fordzilla vs. Japan

BOSTON — First, some full disclosure.

I was born and raised in Detroit as the proud son, grandson, nephew and brother of autoworkers. Nearly everyone in my family works (or has worked) for one of the Big Three, or for the suppliers that feed and fuel that powerful economic engine.

Like most Detroiters, we lived and died by the tumults of the auto industry.

General Motors and Ford wages put food on my family’s table and sent me to college. I spent my 1970s childhood worrying: will Mom and Dad lose their jobs? And, most threateningly, will Japan’s automakers kill off our gritty, car-choked hometown?

For as everyone knew back then, Detroit was churning out enormous, gas-guzzling cars that broke down, or in the infamous case of the Ford Pinto, could explode on impact. Stealthy Japanese automakers, meanwhile, became the very model of small car fuel efficiency and quality.

To those of us in Detroit, Japan wasn’t a faraway and exotic land of neon, sushi and glamorous geisha girls. It was Godzilla — a murderous and grotesque monster determined to stomp out our fair city.

So I hope you’ll forgive the air of triumphalism in this column, which I’ll get out of the way now: Take that, Japan.

I’m referring to this week’s two most fascinating pieces of global economic news: Ford’s profits rebirth and the recall disaster at Toyota (and, to a much lesser extent, Honda, which also announced a recall this week).

First, the good news.

Ford posted a profit in 2009 of $2.7 billion dollars. This balance sheet renaissance was occuring even as — east on I-94 and north on I-75 from its Dearborn headquarters — GM and Chrysler were surviving thanks only to billions of government bailout dollars.

Even more astonishing, Ford’s turnaround follows the company’s $14.7 billion dollar loss in 2008.

“During the worst economic recession in 30 or 40 years, because of the strength of the plan we put in place a few years ago, we were not only able to survive but also to create a foundation that is delivering now profitable growth,” Ford’s CEO Alan Mulally said upon release of the report. Mulally also said that Ford is on track to turn a profit this year, too.

Now for Toyota.

The Japanese automaker is having one of the worst weeks in recent corporate history following the recall of nearly 9 million cars worldwide for sticky accelerator pedals and other flaws, and a temporary production shutdown at factories in the U.S. and Canada.

Then on Friday, the House Oversight and Government Reform Committee said it is tentatively planning a hearing next Thursday on the question: “Toyota Gas Pedals: Is the Public At Risk?”

No, it hasn’t been a good week for Toyota.

“I don’t think we’ve ever seen anything to this magnitude,” Jake Fisher, a senior engineer with Consumer Reports magazine, told the New York Times. “We’ve never seen multiple production lines shut down. If you go to a Toyota dealer right now, they can’t sell you a Camry, they can’t sell you a Corolla or a Highlander.”

So what’s going on?

With regard to Toyota’s sudden and severe quality crisis, most analysts point to the company’s rapid growth as it set out to squeeze its Detroit competitors. The strategy worked spectacularly, of course. Toyota is now the world’s largest automaker, and the second-biggest in the U.S. But somehow, its legendary focus on quality — this line of argument goes — has been lost in the mad dash for market share.

To fight back against its latest woes, Toyota this weekend is reportedly planning a marketing and PR blitz to reassure customers that its cars are still safe.

Ford, meanwhile, has gone the opposite direction.

Under the direction of former Boeing boss Mulally, it has cut costs, sold off unprofitable or distracting divisions like Jaguar, and has designed and engineered a new line of fuel efficient, practical vehicles that consumers actually want to buy. In other words, Ford started acting more, well, Japanese.

Of course, plenty could still go wrong with the company. It still has $34.3 billion in debt. The global auto market is still awash in unsold cars. And the global economy is still on weak legs, particularly in the U.S.

But for now anyway, this native Detroiter thinks the revived U.S. automaker deserves a new nickname: Fordzilla.

Long may it rampage.

You can also learn about all our free newsletter options.

No comments yet

Leave a Reply