A Van Vanguard : Ford, Nissan Overcome Distrust to Build Their 1st Vehicle Together--a Minivan
Ford executive Joseph Gilmore felt strongly that there should be an arrow on the instrument panel of Ford and Nissan’s new jointly developed minivan to help the driver remember which side of the vehicle the gas tank was on. His Nissan counterparts felt otherwise. Nissan won.
Nissan executive Duane Miller thought it preferable to have a knob on the van’s sound system that would both turn the power on and off and control the volume. The Ford contingent insisted that a separate power switch and volume control button was better. This time, Ford prevailed.
Designed and engineered by Nissan and built by Ford in Avon Lake, Ohio, the Mercury Villager and the Nissan Quest--nearly identical vehicles for the same market--are the latest effort at cooperation between members of the notoriously hostile U.S. and Japanese auto industries.
Given the decidedly mixed verdict on previous cross-cultural auto-making liaisons, the Ford-Nissan alliance was something of a gamble. But against the backdrop of increasingly heated trade battles and antagonistic political rhetoric, the international auto industry’s newest couple says it has managed to avoid past mistakes and forge a working relationship.
“The real bottom line is, without each other, neither one of us would have this van,” says Avon Lake plant manager Dave Porter.
Joint ventures make sense from a purely financial standpoint: The cost of building a car from scratch can easily top $2 billion. But it is the designers and engineers who are left with the often formidable task of melding together two distinct methods, cultures and corporate identities into a vehicle that both partners can be happy with.
Gilmore, program manager for the Villager, and Miller, head of Nissan’s research and development arm in the United States, believe that they managed to strike that elusive balance with their new minivan. But both agree that it wasn’t easy.
In addition to sorting out two sets of engineering specifications, two standards for measuring quality and safety, and two vastly different criteria for selecting suppliers, those involved in the Villager-Quest project had to cope with trying to build compromises across language barriers and trust on a foundation of considerable suspicion.
Tensions ranged from Ford refusing to supply the measurements of its components to the Nissan engineers charged with making the initial sketches of the vehicle, to Nissan refusing to let prototypes of the vehicle be driven without heavy camouflage--even on Ford’s own test track.
As if there weren’t enough headaches in the vehicle development process itself, both companies’ engineers had another mission as well: They were supposed to learn from each other, and remember what they learned.
Nissan, which had never before had a U.S. partner, went into the project intending to absorb as much information about Ford’s highly regarded purchasing operations as possible. And a group of Ford managers and engineers spent more than a year in Tokyo participating in the tooling of the body assembly system and picking up tips on Nissan’s manufacturing techniques.
“It’s our job to learn more from them than they do from us,” Ford’s Porter said, in a sentiment echoed by Nissan executives. “Because in the final analysis, they are the competition.”
This fundamental conflict underlying cooperative projects between auto makers largely explains the difficulties other auto-making pairs have encountered in making them work.
Driven together by the escalating costs of car development, market pressure to produce more models in smaller volumes and the hope of learning new technologies and techniques from one another, U.S. auto makers and their Japanese rivals have been experimenting with ways of working together since the mid-1980s.
While some of these collaborations have paid off, the international partners have often found themselves chafing at the constraints of their cooperative entanglements. No one has yet found a way to work together and stay out of each other’s way at the same time.
Chrysler and Mitsubishi, for example, are in the midst of overhauling their rocky relationship. Chrysler is expected to sell its remaining stake in the Japanese company this year, while Mitsubishi last year bought out its U.S. partner’s half of the unprofitable Normal, Ill., assembly plant the two had shared.
Even Ford and Mazda, credited with having had the most mutually beneficial relations over the years, are still working out the kinks. Ford initially agreed to buy Mazda-designed Ford Probes from the Japanese company’s Flat Rock, Mich., assembly plant, where it had no control over the production process. But after problems balancing production with demand last year, Ford bought half the assembly operation earlier this month. It has been reincarnated as a joint venture between the two companies.
Having studied the pitfalls of past attempts, Ford and Nissan agreed that their first project together would be a one-time deal, no strings attached. Rather than a legal joint venture, theirs is a “cooperative association.” “Once you set up a formal entity, then there’s a commitment to feed it,” Gilmore observes. “A less formal arrangement for the first time around is not a bad idea.”
Still, the knowledge that they could part ways at the end of the minivan program was not enough to substitute trust for the suspicion that comes far more naturally to global competitors.
Masami Yagata, a top Nissan engineer who was charged with making the first engineering sketches before the final contracts were signed between the companies in January, 1988, says Ford wouldn’t even provide him with the parts specifications he needed to complete his work. He ended up tearing down a damaged Taurus wagon that Nissan had used on its test track in Japan in order to figure out how to fit the Ford transmission into his design.
“I was so disappointed and depressed,” Yagata says. “I thought that Ford did not have any idea of Nissan’s capability. They were so nervous to give us the drawings--maybe they thought I would hand them out to Nissan’s powertrain group.”
But after the contracts were signed and the first prototypes built in 1989, Yagata says, the trust between the companies improved dramatically. Although responsibilities were carefully divided--Nissan took charge of the design and engineering, Ford handled purchasing and manufacturing--teams from both companies had to sign off on anything the customer could see, hear or touch. That meant hundreds of hours of what Nissan’s Miller describes as “polite, tough meetings.”
Andrew Vandecaveye, a product planning supervisor at Ford responsible for hashing out the interior design with Yagata’s Nissan engineering team, remembers a particularly arduous tug-of-war over whether the climate control buttons would have words and pictorials, as they do on most Ford vehicles.
Nissan, which puts only pictorials on climate controls, thought having the word “floor” in addition to a picture with an arrow showing the flow of air, for example, was a little redundant.
“That was probably one of the hardest battles I fought,” Vandecaveye said. “I held out a long time, because it was a Fordism in my mind: You had to have words and pictorials.”
While Ford conceded that point, Nissan made its share of sacrifices for the common good.
Ford wanted to show the prototype of the van to groups of prospective customers early on in order to get feedback on their likes and dislikes. Nissan is accustomed to operating in a domestic industry where the product cycle is shorter--leaving no time for feedback in some cases--and seven fierce competitors are always on the lookout for its ideas. So such a breach of confidentiality was unheard of.
Nissan insisted on camouflaging the exterior wherever the van was driven until late in the program, but Ford prevailed on the issue of clinic evaluations. And Yagata grudgingly admits that Nissan may try to do more of them with its future vehicles.
The willingness of both parties to persevere at this often-maddening process is in large part testimony to the importance of the minivan in the U.S. vehicle market. Since Chrysler introduced the vehicle to the American market in 1983, annual minivan sales have rocketed to nearly 900,000, and Ford predicts that over a million will be sold in 1993.
The Avon Lake plant’s 150,000-vehicle capacity--to be split approximately 65-35 between Lincoln-Mercury and Nissan--will keep the Villager and Quest from becoming major players in the market. But both partners are hoping that the vans’ car-like performance--a result of its front-wheel drive transaxle--and standard luxury appointments will win them a substantial new customer base.
The only other front-wheel-drive minivans on the road today besides Chrysler’s long-dominant Caravan and Voyager are GM’s pointy-nosed, poor-selling APVs. Ford will follow up with another front-wheel drive van in 1994, to be sold only by the Ford division.
The sibling vans are similarly priced, ranging from $17,545 to $23,546, with various option packages. While the reviews from enthusiast magazines have been favorable, both companies will get a better gauge of whether their efforts at synergy were successful when the minivans begin to hit dealerships this month.
Sales volume will of course be the main measurement by which the success of the Quest-Villager project is judged, and as the marketing campaign ramps up, the partners are beginning to transform themselves into competitors. At the same time, those involved in the project are beginning to size up what they have learned in the process.
Ford executives say they will likely follow Nissan’s practice of involving suppliers early on in the development process, while Nissan says it will use some of the 140 U.S. suppliers their executives met through Ford on future vehicle projects.
Each side can tick off its own list, but what Ford’s Gilmore calls the “osmosis effect” may be the most significant in the long term.
“People don’t necessarily think about it, but all of a sudden we’re doing things in a little different way that seems to be closer to the way Nissan does it,” Gilmore says. “There will be Nissan influences at Ford that are almost subconscious, and I think they will find the same.”
