Mazda Plans to Buy Engines From Ford for U.S. Plant

In an important sign of Detroit’s improved competitiveness, Mazda said Tuesday that it plans to buy hundreds of thousands of auto engines from Ford, to be installed on most of the cars Mazda builds in its new U.S. assembly plant.

If the deal goes through--Ford cautioned Tuesday that the agreement is tentative--it will mark the first time that Japanese cars will come equipped with Big Three-built engines.

The plan also signals another step in the “Americanization” of the rapidly expanding U.S. auto operations of the Japanese industry.

While all of the major Japanese auto makers have now opened assembly operations in this country, Detroit executives complain that many of their components are still coming from Japan or from the new American plants set up by their Japanese suppliers. Ford executives have even argued that the cars built here by the Japanese should be counted as imports under the quotas that limit car shipments from Japan.

But the rise in the value of the Japanese yen against the dollar has made it too expensive for the Japanese to continue to import as many parts from Japan, and so they are scrambling now to find more domestic suppliers. Engines are the most costly auto components, and so several Japanese firms are switching to U.S. engine production.

Yet Mazda, which is 25% owned by Ford, is the first to go to Detroit for its engines.

Osamu Nobuto, president of Mazda’s U.S. manufacturing arm, said Mazda decided to buy the engines from Ford because it was cheaper to do so than to build an engine plant near Mazda’s new Flat Rock, Mich., assembly facility.

Mazda spokesman Jim Gill said the current plan calls for Ford to supply the engines for all of the base-model Mazda and Ford cars built at Flat Rock, beginning in the mid-1990s. Currently, Flat Rock plant builds the Mazda MX6 and the Ford Probe and will begin producing the Mazda 626 sedan next fall.

The engine project is just the latest sign of the deepening ties between Mazda and Ford. Yet, until recently, their partnership was one-sided; Mazda simply produced cars and trucks for Ford.

But now that Ford has regained a measure of international competitiveness, the flow of products is starting to go the other way as well.

For example, Ford has just announced plans to build Bronco II utility vehicles for Mazda beginning in the 1991 model year, and there are reports that Ford may supply Mazda with a new pickup truck by the mid-1990s as well.

Meanwhile, an industry trade journal reported this week that Ford may also export a new series of U.S.-built automatic transmissions to Japan for installation on Mazda’s Japanese-built cars.

Metalworking News, the trade journal, said Mazda would work with Ford on the development of the new transmissions, earmarked for production in the mid-1990s.