When top executives at Ford Motor Co talk about a "world car," it's not just a rhetorical flourish.
Ford, the second-largest U.S. auto manufacturer and the leading truck builder, is investing heavly in factories and equipment around the globe that will build vehicles of future decades that will have many like components.
Consumers will be able to get parts for their cars in Munich, Mexico City, Melbourne or St. Louis. The cars and parts they buy will contain components manufactured in South America, Europe and the United States.
This reality will evolve from what Ford President and Chief Executive Philip Caldwell calls the biggest industrial revolution in peace-time history. But before the revolution is completed, Detroit's big manufacturers face a period of reduced profits.
At least through 1985 and perhaps beyond, in Caldwell's view, the U.S. auto industry will be engaged in a massive and costly retooling effort -- estimated at $80 billion -- as it gears up to turn out the cars of the future. Cars will become smaller over those years, more fuel-efficient and more costly to buy.
"At the same time, however, this will give us an unusual opportunity to write a clean slate -- to renew operations; to get two or three improvements for the cost of one, to do what the Japanese steel and auto industries did when they had to rebuild totally after World War II," Caldwell said recently.
But the key to the future of world automobile production is that foreign competitors -- some aided by their governments -- will be applying their own resources to modernization on a worldwide basis.
This is placing great pressure on Detroit to start planning now for what Caldwell calls the "post-reconstruction phase" after the current retooling projects are completed. For one thing, the U.S. firms must maintain a position in the market for the interim years. Otherwise, the American manufacturers will end up with the smaller cars required by pressing energy demands but without a share of the market, if the foreign car makers have run off with it in the meantime.
Gradually, as American manufacturers introduce more and more smaller and fuel-efficient cars -- especially next fall and beyond -- Caldwell sees a broader range of products and greater economies in production leading to a reduced sales thrust by foreign manufacturers, who now are talking about a quarter of the industry's monthly sales volume.
"At the same time, the increasing similarity between vehicles manufactured here and those made elsewhere in the world by U.S. companies will permit some cost, investment and marketing efficiencies through common vehicle design and component programs," Caldwell stated.
And, in this regard, Caldwell's company is the pioneer in multinational operations. Ford already has built-in international efficiencies that other world manufacturers either are studying today or already copying.
Donald Peterson, the Ford executive vice president for international automotive operations, said a major trend of the next two decades will be the emergence of fewer manufacturers around the globe, each larger and engaged in many markets.
Ford, which already manufactures or assembles cars and trucks in 18 countries amd markets products in 185 countries or territories, is one of the companies that will survive this multi-national consolidation -- although the U.S. company probably will do it in some markets through joint ventures with overseas corporations.
"It will take a pretty big outfit, with a good base of volume, to take advantage of full economies of scale in production to accomplish this," Peterson said in an interview. "The underlying reason is that auto production is becoming progressively more complex in design, in a continuous drive toward the ultimate in fuel economy, with major retooling for production required worldwide," he said.
To continue Ford's strong penetration of many world markets -- even as its struggling North American business tries to regain market share and profitability in the early 1980s -- the company plans to spend $8 billion for factories and retooling in the 1979-1984 period outside the U.S. and Canada.
Peterson said, "we'll continue to spend pretty much at that rate -- and maybe even more" -- in the years to some. Ford has led U.S.-based auto companies in sales outside North America for 15 years, and Caldwell said his firm sells more products outside its base market than any U.S. corporation.
"These aggressive spending plans are designed to ensure that Ford regains that dominance during the 1980s," said Peterson, at a time when U.S. gaint General Motors Corp. is gearing up to confront Ford more forcefully for multinational sales and profits.
The attraction of the vehicle manufacturing business to Ford, GM and other large companies that will survive on a base of large volume, in Peterson's view, is simply that there will be "no fundamental change in the methods by which we move goods and people." As weaker countries become stronger economically, he sees a growing market all over the the world for cars and trucks.
In the short run, however, higher energy prices may mean somewhat slower growth than projected, he added.
Ford has been successful overseas because it got started very early, for one thing.The auto company was one of the first truly multinational business and has been active in 20 world markets for half a century. For example, there are Ford Dealerships in South America that have been in the same families for more than 50 years.
"We have a long-standing presence, we are truly balanced around the globe . . . this makes a fabulous resource in manpower," more than 200,000 employes outside North America and virtually of of them nationals of their own countries. "We have cadres who have spent their entire adult life with Ford Motor Co.," Peterson said.
This solid business and reputation of Ford in many markets, coupled with heavy spending for new products and plants, represents the foundation for the company's strategy of building world cars.
The first products of this new era in North America will be named the Ford Escort and Mercury Lynx, front-drive cars that debut next fall and which are designed to begin bringing back Ford's U.S. market share. The cars have been built by drawing upon a worldwide reservoir of design, technical and financial resources they were designed by Germans and Americans and Englishmen and Swiss and Spaniards, and will have components from a chain of countries that include Japan and Yugoslavia.
A sister car, also the Escort, will be introduced at the same time in Europe. "Like most sisters they will look a little different but they will be similar under the skin," Caldwell said.
A new computer center here, used by Ford's Europan engineers and designers during the Detroit night hours and by the local professionals during the daytime, has given the company the international building tool.
"The biggest enemy of progress in our industry -- and I suspect any other -- can be summed up in the three letters, N.I.H.," Caldwell said. "They stand for Not Invented Here, and they imply a kind of in-built resistance to other people's ideas."
Ford has a better idea -- using its international resources to build products for sale everywhere. "We are told we cannot beat the importers here in the U.S. -- but we have been beating the importers on their own doorstep in the very competitive European markets," concluded Caldwell, noting that Ford of Britian has been swamping German and Japanese manufacturers, and that the Ford Fiesta is the top-selling car in its class in Germany.